China puts tax reform in sights as leaders mull government’s role in alleviating pressure
- More than 300 reform directives, including the need for a fiscal and tax overhaul, will be officially outlined following Beijing’s third plenum
China’s new tax-reform plans decided at this week’s third plenum will focus on raising income for local governments, as well as support from the central government, in response to the financial difficulties facing many regions, a senior Communist Party official said on Friday.
“In response to the financial difficulties of local governments and grass-roots organisations, it has been proposed to improve the financial relationship between the central and local governments,” Han Wenxiu, deputy director of the Office of the Central Financial and Economic Affairs Commission, said at a news conference in Beijing.
The reforms include increasing local governments’ autonomous fiscal capacity, expanding their tax sources, improving the matching of financial resources at lower levels of local governments and addressing their spending needs, appropriately strengthening the responsibility of the central government and raising its fiscal spending obligations, Han said.
“It is necessary to study a corresponding tax system that is compatible with the new sectors,” he said, without elaborating. “After more than 40 years of rapid development, our country’s wealth has continued to accumulate.
“The communique requires exploring national balance-sheet management, optimising various structures, and making adjustments.”
