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More proactive fiscal policy will be implemented: govt

Updated: Mar 6,2015 11:42 AM     chinadaily.com.cn

China’s Minister of Finance Lou Jiwei (center) takes questions from journalists at a news conference during the ongoing two sessions in Beijing, March 6, 2015.[Photo by Li Xiang/chinadaily.com.cn]

China’s Finance Minister on March denied rumor that the government spent 300 billion yuan ($47.9 billion) on public vehicles, receptions and trips.

“It is nonsense to say that,” said minister Lou Jiwei at a press conference.

Public funds for government vehicles, officials’ overseas trips and official receptions are known as “three public funds.”

The central government’s expenditure of the funds was 7.1 billion yuan last year, 800 million yuan lower than that of 2013, he said. “The funds for this year would not exceed last year’s level.”

Lou said he was not clear about the use of funds in local governments, but he estimated the total figure would be dozens of billion yuan, rather than “300 billion yuan” as rumored.

China’s Minister of Finance Lou Jiwei takes questions from journalists at a news conference during the ongoing two sessions in Beijing, March 6, 2015.[Photo by Wang Jing/chinadaily.com.cn]

Here are other highlights of the press conference.

Personal income tax

The government will loosen taxes charged on enterprise annuity to support the fragile pension system encumbered by an aging population.

It’s not fair to raise the threshold for personal income tax, Minister of Finance Lou Jiwei said.

Lou also acknowledged drawbacks in the taxation system in regard to personal income, while responding to a question whether more tax cuts are expected to drive consumption needs.

Tax Preference policies under “new normal”

It is part of reform to increase tax preference policies, especially regional tax preference policies, said Lou. “There will be no new policies added, we will focus on putting the old policies in order and maintain a fair competition based on the market.”

According to Lou, not only China’s economy is entering the new normal, the global economy is entering the new normal as well. “It is a de-leveraging process ever since the global economic crisis in 2008, different countries are undertaking the effect differently,” said Lou. Under an unclear momentum of global economic recovery, China needs to face the downward pressure and adopt a moderate expansion policy, added Lou.

Major progress has been made in reforming the fiscal and tax systems, said the report. In 2014, the ministry worked to ensure that constraints on budgets were tightened, fiscal and budgetary management was made more standardized, further improvements were made to the system for managing government debt and financial discipline was strengthened.

According to the report, the ministry will continue to implement proactive fiscal policy in 2015, as appropriate, increase the intensity. The ministry will increase the deficit by an appropriate amount and put to use funds carried over from previous years to increase the intensity of spending.

Government deficit for 2015 is projected to be 1.62 trillion yuan nationwide, an increase of 270 billion yuan over last year, with increases in both the central and the local government deficit, the report said.

The ministry will implement structural tax cuts and reductions to fees across the board to strengthen support for the real economy as well as strengthen efforts to make use of existing government funds. The government investments will be kept at a certain scale, and make good use of the guiding role of such investments.

Data and background

Central government spending this year is expected to total 2.5 trillion yuan, up 10.4 percent, to which a further 27.9 billion yuan ($4.46 billion) is to be added in funds carried over from previous years, according to a report released by Ministry of Finance on March 6.

Major progress has been made in reforming the fiscal and tax systems, said the report. In 2014, the ministry worked to ensure that constraints on budgets were tightened, fiscal and budgetary management was made more standardized, further improvements were made to the system for managing government debt and financial discipline was strengthened.

According to the report, the ministry will continue to implement proactive fiscal policy in 2015, as appropriate, increase the intensity. The ministry will increase the deficit by an appropriate amount and put to use funds carried over from previous years to increase the intensity of spending.

Government deficit for 2015 is projected to be 1.62 trillion yuan nationwide, an increase of 270 billion yuan over last year, with increases in both the central and the local government deficit, the report said.

The ministry will implement structural tax cuts and reductions to fees across the board to strengthen our support for the real economy as well as strengthen efforts to make use of existing government funds. The government investments will be kept at a certain scale, and make good use of the guiding role of such investments.