China's finance minister: tax cuts 'the top priority'

China's Minister of Finance Liu Kun (C) answers questions at a press conference on the country's fiscal and tax reforms and fiscal work for the second session of the 13th National People's Congress in Beijing, capital of China, March 7, 2019. [Photo: Xinhua]

China's Minister of Finance has announced further tax cuts for this year to reduce the burden on enterprises. The minister made the announcement during a press conference on Thursday in Beijing.

Minister Liu Kun suggested the country is to cut taxes this year by nearly 2 trillion yuan, or 300 billion U.S. dollars.

He said that among the government's financial policies for the year ahead, implementing the tax cuts was the top priority.

"Tax reduction is the top priority for this year's fiscal policy. It is a major measure to reduce the burden on enterprises and stimulate the vitality of the market. It is also a major macro-economic policy measure to support steady growth, job security, and structural adjustment."

China has vowed to inject vitality into the market through easing economic burdens on enterprises and individuals.

Last year, taxes and fees on enterprises and individuals in the country were reduced by around 1.3 trillion yuan

Minister Liu suggested the government will roll out further preferential tax policies for manufacturers and small businesses.

Meantime, to accommodate larger tax cuts and stimulate economic growth, the finance ministry has pushed the budget deficit from 2.6 percent of total economic output to 2.8 percent.

The minister explained the move.

"On the one hand, we will strengthen the conversion period regulation to promote steady and rapid economic development. On the other hand, it is also compatible with larger scale tax cuts and fee reductions, effectively reducing the burden on enterprises and stimulating the vitality of market players."

Minister Liu also added that more of the profits from state-owned enterprises will be needed to make up for the sweeping tax cuts.

"As well as appropriately increasing the deficit rate, the central government has also increased the profits it collects from certain state-owned financial institutions and state-owned enterprises, and local government will also revitalize various funds and assets through multiple channels. In this way, some funds have been raised, which means that we will not need to raise the deficit too much. So this year's deficit arrangement is both positive and prudent. "

Meantime, the Finance Minister again dispersed concerns over government debts, suggesting the debt balances of both central and local governments are within the legal limit.