Tax cut and administrative fees reduction highlights fiscal 2018

China's Ministry of Finance has submitted its budget report and budget plan to the 13th National People's Congress for legislators to review and provide feedback. 

Finance officials briefed journalists at a press conference yesterday and took questions on the ministry's efforts regarding fiscal and taxation system reform, as well as highlighting tax cuts and reductions in administrative fees as being on the agenda.

In the 2018 Government Work Report, Chinese Premiere Li Keqiang said that China has been cutting tax and administrative fees over the last five years to a total value of 3 trillion yuan.

Despite the cuts, fiscal income still grew by 7.4% in fiscal year 2017, a 2.9% increase on the previous year.

Finance Minister Xiao Jie said that strong economic momentum is the main reason behind the fast growth in revenue.

"The economy is the foundation of finance. Fiscal income relies on economic momentum. In general, fiscal income is in positive correlation with economic soundness. As we know, China's total economic output reached 80 trillion yuan last year, a 6.9% increase from the previous year. The economy is gaining momentum and enterprises are making profit. That is the basis for fiscal income growth."

Regarding plans for further tax cuts and reductions in administrative fees, Xiao Jie said that further reform of the value-added tax and personal income tax systems are primary concerns.

Citing the Government Work Report, Vice Finance Minister Shi Yaobin suggested that the threshold of personal income tax will be raised, while more attention is given to children's education and health care for major diseases.

"We will cancel unnecessary taxes and give more weight to important categories in the personal income tax reform. We will raise the threshold for personal tax income and increase the deduction for specific items. This will rationalize the tax burden and promote social equality."

When it comes to real estate tax, Vice Minister Shi Yaobin said that legislators will take note of common international practices while considering Chinese conditions when drafting related laws.

Meanwhile, Xiao Jie shed light on how the government would help guarantee the effective use of its money in light of China's growing fiscal expenditure in recent years.

"We will assess the effectiveness of the use of fiscal funds. In recent years, the Ministry of Finance has explored various frameworks for the assessment system. For the next steps, we will follow the requirements of the 19th CPC National Congress and further promote the effective use of fund to enhance the quality of public service."

China's fiscal expenditure exceeded 20 trillion yuan for the first time in fiscal year 2017. That number is expected to reach 21 trillion in the 2018 fiscal year according to this year's Government Work Report.