Continuity of fiscal policy ensured
China plans to keep its fiscal deficit at about 300 billion yuan (US$36.1 billion) in the short term, according to Finance Minister Jin Renqing.
The ratio of the fiscal deficit to the total gross domestic product (GDP) will also drop, as the country's economy grows continuously, he said in an article published in the People's Daily yesterday.
"The fiscal deficit/GDP ratio is expected to drop to about 2 per cent next year," he said.
Jin said it is still necessary that the government keep a certain amount of fiscal deficit and issue a certain amount of special bonds for construction.
The government needs to maintain a relative continuity in its fiscal policy, he said.
It needs money to finish unfinished projects.
At a time when the country's economy is growing at a high speed and some industries and projects rely heavily on treasury bond investment, an abrupt stop would have a negative impact on the country's economy, he said.
There are also some problems in some weak sectors, which the government needs to invest in.
"Maintaining a certain amount of fiscal deficit is beneficial for the government to concentrate some resources to increase input in public areas such as agriculture, education, public health, social securities and ecological environment," he said.
It is also beneficial for the government to deal actively with complicated domestic and international issues.
The central government will continue to increase support for development of the country's central and western areas, Jin said.
It will also increase support for renovation of the old industrial bases in the country's northeast.
Development in the old revolutionary base areas, border areas, poor areas and areas where minority ethnic groups live will be backed, and support will be given to key projects such as construction of the Qinghai-Tibet Railway and the west-to-east gas pipeline project.
While maintaining a sustainable and stable growth in the fiscal revenue growth, the government will actively push forward structural tax system reform, Jin said.
The existing tax system has played an important role in maintaining a stable growth in the country's fiscal revenue, but it is far from perfect and rational, he said.
Companies will be allowed to keep more money in their pockets through improvement of the tax system, he said.
The government will firmly push forward a value-added tax reform, which has started on a trial basis in the country's northeast provinces from July 1 this year.
It will also actively push forward enterprise income tax reform, which aims to create a fair environment for all companies.
There will not be big changes in the tax burden for foreign-funded companies following the enterprise income tax reform.
"They will enjoy a transition period," he said.
The government will continue to reform and improve the tax and fee system in rural areas to reduce farmers' financial burden.
It will also continue to improve the tax rebate system, he said.