"The Chinese government should cancel value-added tax levied on businesses and oblige them to increase employees' wages instead," said Zong Qinghou, chairman of China's famous beverage firm Wahaha, in a side-session to the annual National People's Congress assembly.

Over the past two years, Zong has enjoyed considerable media exposure for his bold confrontation with former French partner Danone over the control of the famous Wahaha brand.

Heavy taxation has eaten into the profits of many companies in recent years, especially small and medium-sized ones, restricting their ability to increase salaries for their employees, he said.

"If people don't earn more, they won't spend more," he added. "China has a huge population of 1.3 billion, but we still rely too much on overseas demand to support our economic growth. As a result, China's economy has suffered a heavy blow from the global economic recession and contracting overseas demand."

Zong suggests that while maintaining export growth, China should stimulate domestic demand by increasing people's incomes. "Those working in businesses should be given higher salaries."

However, the crux lies here: with heavy tax burdens, enterprises will be reluctant to part with a sliver of their already razor-thin profits to increase pay for employees.

One solution proposed by Zong would be that the government should reduce tax levies on businesses, or even cancel value-added tax altogether and instead compel them to increase salaries.

In China, a company or individual engaged in marketing goods and/or providing processing, repair and/or replacement services within China will be liable for value added tax at a rate of up to 17 percent.