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Changes expected to vitalize markets and reduce burdens for companies
Premier Li Keqiang has called for careful implementation of China's decisions to further cut taxes and fees on enterprises and individuals to boost the vitality of market entities, as the country faces downward economic pressure.
The premier made the statement when inspecting the Ministry of Finance and the State Taxation Administration on Thursday, along with Vice-Premier Han Zheng, who oversees the two departments.
Tax and fee reduction is a key task in the Government Work Report, delivered by Li on March 5. This year, 2 trillion yuan ($297 billion) is expected to be cut in taxes and fees for more than 30 million enterprises across China.
When inspecting the Ministry of Finance, Li heard officials' reports on the preparations for the value-added tax reduction that will take effect on April 1, including cutting the VAT rate for the manufacturing sector from 16 percent to 13 percent.
The premier called on officials to substantially reduce taxes for the manufacturing sector and track the changes in tax burdens after the VAT reduction. In addition, taxes should be cut for service sectors to boost consumption and improve people's livelihood, he said.
At the State Taxation Administration, Li stressed that big data platforms should be used to monitor the real effect of tax and fee reductions.
During a meeting after the inspection, Li heard reports by both departments on the new move. The downward pressure cannot be underestimated this year, as the economy faces increasing uncertainties and challenges, Li said. Therefore, greater tax and fee reductions should be a priority as it can help ease burdens for enterprises, stabilize employment, optimize economic structures and income distribution, and help promote a sustainable source of government revenue, he said.
Tax reduction should be accomplished as soon as possible to unleash the vitality of enterprises and keep the economy within a reasonable range, the premier said. The Government Work Report set a goal of 6 percent to 6.5 percent for this year's GDP growth.
The premier called for concerted efforts to ensure that taxes for manufacturing should be significantly lowered and all sectors will see tax bills decrease.
Tax reduction will put pressure on government revenue and the government should tighten its belt to offer enterprises more benefits, the premier said. Apart from key projects and necessary spending, the central government should cut 10 percent from other expenditures, and local government should also slice spending, he said.
The central government will transfer more funds to local governments, especially those in central and western China, Li said.
All regions and State Council departments must prevent random fee charges and should solve problems for the public in a punctual way, he added.