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Premier stresses proper use of 2t yuan in new funds

Updated: Jun 10,2020 05:35 PM
Premier Li Keqiang holds a video conference on June 1 in the northern port city of Qingdao during an inspection to East China’s Shandong province.

At the State Council executive meeting on June 9, Premier Li Keqiang stressed making sure the new fiscal funds of 2 trillion yuan ($279.71 billion) should be channeled to the primary level as soon as possible, as he required promptly and fully implementing the policies of a sizable scale from the 2020 Government Work Report, and boosting market and society’s confidence.

Premier Li said the economy has been steadily reopening, while at the same time, it is faced with great uncertainty in the global environment.

Resolving any pressing difficulties faced by market entities and vulnerable groups in work and life is urgent, the Premier said.

Advancing the six priorities where stability is key and the six fronts where protections are needed is an important mission for the government this year, said the Premier.

He added that supporting jobs, people’s basic living needs and businesses primarily rely on prefecture and county governments, thus a special transfer payment mechanism must be set up to ensure this year’s increased fiscal funds go straight to primary-level governments and directly benefit businesses and people.

Local governments to cut taxes, reduce fees first

At the press conference of this year’s national two sessions, Premier Li confirmed that a mechanism will be set up to ensure fiscal funds go straight to primary levels, enterprises, and the people.

At the executive meeting on June 9, the Premier further explained that the funds in fact will not be forwarded to primary-level governments. Instead, a great portion is to be used to cut taxes and reduce fees.

The Premier added that this year, the government will cut taxes and fees by 2.5 trillion yuan, of which social insurance fees total 1.6 trillion yuan. Most will get done this year, and many places have been proactively cutting taxes and reducing fees on their own.

Premier Li said this will effectively ease the difficulties faced by businesses, especially micro, small and medium-sized ones, and meet the pressing needs of people in need. Yet it will also lead to sizable shortfalls in the fiscal resources of prefecture and county governments.

The Premier said the 2 trillion yuan in new fiscal funds, made available by raising the budget deficit and issuing special treasury bonds for COVID-19 control, will go straight to prefecture and county governments.

This will support local governments in providing relief to the smaller firms, self-employed individuals and vulnerable groups who have been hit hardest by COVID-19, enhancing infrastructure building, particularly in public health, and meeting expenditures for COVID-19 control.

A big proportion of the funds will be used to cut taxes and reduce fees before the special transfer payment fills up the local fiscal shortfalls, the Premier said.

Provincial governments to enhance supervision on funds

Tax cuts are applicable to taxes levied by the central government as well as taxes shared by central and regional authorities. And fee reduction rests on the regional financial departments, the Premier said.

He said that a special transfer payment mechanism should be set up to ensure that all new fiscal funds this year will be fully channeled to prefecture and county governments at the earliest possible time by increasing transfer payment from central to local governments.

The financial departments of the central government will beef up management along with concerned departments. Provincial governments should, while enhancing oversight, endeavor to make their fiscal resources available to primary-level governments to help fill their shortfall of funds.

This will ensure measures taken by the central government will fall into place, particularly in employment, people's livelihoods, and market entities, Premier Li said.

The Premier said governments at all levels should cut spending to jointly bridge gaps generated by tax and fee cuts, in a bid to benefit enterprises and people.

Poverty alleviation on top of regional financial agendas

The COVID-19 epidemic prevented some rural residents from working outside, which caused financial difficulties in their lives and made poverty alleviation a further pressing matter, the Premier said.

He stressed that preferential policies for poverty mitigation by the central financial authority should be fully implemented, and regional governments should also provide more financial support. Related capital funds should be pragmatically utilized by the primary-level governments at the earliest time.

The Premier said that further efforts should be made to step up work on safeguarding employment of impoverished laborers, consumption and industry development in poverty mitigation, among others, especially against the backdrop of the COVID-19 impact.

The remaining impoverished rural residents should be lifted out of poverty this year, he added.

Embezzlers will be punished

A stringent supervision mechanism should be established, to ensure tax and fee cuts policies for small and micro-sized enterprises and self-employed people. And funds supporting people in need should also be pragmatically utilized, the Premier said.

Governments at city and county levels should establish recording systems to keep track of capital flows and accounts, and the Ministry of Finance should establish a full-coverage and full-chain monitoring system.

Accountants at all levels should supervise and urge direct allocation of funds and ensure the capital flows tally with corresponding accounts.

The Premier said that 2 trillion yuan ($282.9 billion) in newly added financial funds should not be squandered, as it should be utilized on enterprises and people in need.

Governments should crack down on embezzling funds and making fraudulent applications and claims.

Premier Li said that governments at all levels should fully utilize financial funds in a pragmatic manner for the sake of people's welfare.