Lou Jiwei attends the Boao Forum for Asia, April 10. (File photo/CNS)
China has set a clear timetable to build a modern fiscal system that will help optimize resource allocation, unify market standards, and boost social justice, the country's finance minister has said.
Major reform tasks concerning the fiscal and tax system will be completed by 2016, before a modern fiscal system will be built by 2020, Lou Jiwei said in an interview with Xinhua.
In Lou's words, deepened fiscal and tax reforms will not be mere amendments to current policies; rather, they will involve systemic restructuring and institutional innovation. He said the years 2014 and 2015 will be vital in pushing forward the reforms.
The top priority will be increasing the transparency of government budgets. With the exception of confidential matters, information concerning government budgets and final accounting of revenues and expenditures by both the central and local governments will be made public, according to China's reform agenda.
"The disclosure of such information reflects the government's openness, and is a necessity required by governance by the law and prevention of fiscal risks," Lou said.
Improvements will be made to cover all channels of budgets, including public finance, operating budgets of state-owned assets and budgets of government funds, he said.
Meanwhile, the country is planning to lock in six tax categories, including value-added tax (VAT), consumption tax, resources tax, environmental protection tax, property tax and individual income tax as major reform targets.
It will continue with a scheme to replace turnover tax with VAT in more sectors including services, construction, real estate and financial sectors, Lou said, with turnover tax expected to be eliminated by 2015.
China has been pushing VAT reform by replacing the turnover tax since the beginning of 2012 in a bid to push forward structural tax reduction and boost the growth of service industries. The reform started with transportation and some modern service sectors, and expanded to railway transportation, postal services and the telecom industry.
Meanwhile, China is speeding up its resource tax reforms in the coal sector by levying tax based on sales value instead of output. Such a reform was introduced to crude oil and natural gas in Nov. 2011. Lou also said resource tax will expand to the ecological system, including rivers, forests, grasslands, sea coasts and lake shores.
He added that a current administrative charge on pollution will be upgraded to an environmental protection tax, in order to boost environmental and ecological protection through taxation.
According to the minister, the country will also accelerate legislation of a property tax. Currently, the property tax is being piloted in the cities of Shanghai and Chongqing.
Lou said that a recent meeting of the central leadership of the Communist Party of China (CPC) demonstrated its pledge to build a comprehensive, transparent and efficient fiscal and tax system.
Priority will also be given to adjusting power and spending responsibilities between central and local governments in a rational manner, adjusting distribution of revenues between them while keeping the current division of financial resources stable, said a statement released after a meeting of the Political Bureau of the CPC Central Committee on June 30.
Lou Jiwei 樓繼偉