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Read in Chinese
Speakers:
Xu Hongcai, vice minister of finance
Wang Lujin, deputy auditor general of the National Audit Office
Wang Daoshu, vice minister of the State Taxation Administration
Chairperson:
Shou Xiaoli, spokesperson of the Publicity Department of the Central Committee of the Communist Party of China (CPC)
Date:
May 17, 2022
Shou Xiaoli:
Ladies and gentlemen, good morning. Welcome to this press conference held by the Publicity Department of the CPC Central Committee. This is the fourth press conference under the theme of "China in the past decade." Today, we are joined by Mr. Xu Hongcai, vice minister of finance; Mr. Wang Lujin, deputy auditor general of the National Audit Office; and Mr. Wang Daoshu, vice minister of the State Taxation Administration. They will first brief you on China's fiscal and taxation reforms and development and then take your questions.
Now, I'll give the floor to Mr. Xu Hongcai.
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Xu Hongcai:
Ladies and gentlemen, friends from the media, good morning. It's my pleasure to attend today's press conference and introduce the reforms and development of China's fiscal and taxation sector. First, on behalf of the Ministry of Finance (MOF), I would like to express my heartfelt gratitude to friends from the media for their ongoing interest in and support for China's fiscal and taxation sector.
The CPC has always attached great importance to its leadership of China's fiscal sector and is continuously working to reinforce it. The third plenary session of the 18th CPC Central Committee stipulated that public finance is the foundation and an important pillar of governance. This has chartered a new historical course for public finance in China. Over the past decade, the MOF has worked under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, followed the guiding principles of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and implemented the new development philosophy. The MOF has been earnestly implementing proactive fiscal policies and continuously improving macro regulation. It strengthens financial support and policy measures for projects concerning the country's most fundamental interests, promotes reforms of fiscal and taxation systems and gives full play to its roles as the "driving force" and "pioneer" of the country's deepening reforms. It has also worked to keep the major economic indicators within the appropriate range and contribute to the country's high-quality development.
The capacity of China's fiscal sector kept improving in the past decade. With the steady and sound growth of the Chinese economy, the country's fiscal revenue maintained a rapid growth rate, and the fiscal "cake" has also grown larger. Revenue under the national general public budget grew from 11.73 trillion yuan in 2012 to 20.25 trillion yuan in 2021, with an average annual growth rate of 6.9%. The total amount in the past decade reached 163.05 trillion yuan, which has provided solid funding support for China to realize its first centenary goal. Fiscal spending also increased every year. Expenditure under the national general public budget increased from 12.6 trillion yuan in 2012 to 24.63 trillion yuan in 2021, with an average annual growth rate of 8.5%. The total amount in the past decade amounted to 193.64 trillion yuan, which has effectively promoted the comprehensive development of China's economy and society.
Macro regulation through fiscal policy continued to be optimized in the past decade. General Secretary Xi Jinping stressed that macro regulation must adapt to the features of development at certain stages and to changes in the economy, and that tailored efforts should be made to expand demand or adjust supply where necessary. From 2012 to 2021, the MOF has followed the decisions made by the CPC Central Committee and the State Council, continued implementing proactive fiscal policies and made timely and appropriate adjustments. These efforts have effectively mitigated the impact of periodic economic fluctuations and provided strong support for high-quality economic and social development. The MOF has maintained the growth rate of mandatory government expenditures to support the implementation of the country's major strategic tasks. The MOF has carried out targeted tax and fee cuts. It has reduced the burden on businesses to the value of 8.8 trillion yuan from 2013 to 2021, with market vitality continuing to improve. The MOF rearranged public debt in a science-based manner. From 2015 to 2021, a total 12.2 trillion yuan of local government special-purpose bonds were added, and efforts have been made to expand effective investment. The MOF has also followed the requirement of living on a tight budget and strictly controlled general expenditures in a bid to allocate more fiscal resources to key sectors and weak areas. The MOF has established and regularly implemented a mechanism to directly allocate budgetary funds to prefecture- and county-level governments, guided the flow of financial resources toward lower levels of government, and supported the sound and long-term economic and social development.
Fiscal support became more targeted and effective in the past decade. Promoting the development of the Party's undertaking requires sufficient funding. Following the view of better serving the central task of economic development and the overall interests of the country, the MOF has strengthened financial support, allocated fiscal capacity to major tasks and boosted self-reliance in terms of sci-tech. It also strengthened support for people's basic livelihoods, promoted regional coordination between urban and rural areas, helped secure victory in the battle against poverty, fought against pollution, dealt with imbalanced and inadequate development, and worked to establish a new development paradigm and realize high-quality development. Sci-tech expenditure in the general public budget amounted to 7.1 trillion yuan in the past decade. Government spending on education from 2012 to 2020 was 28.88 trillion yuan, with statistics for 2021 yet to be published. Government spending on social security and employment totaled 23.11 trillion yuan.
Reforms to China's fiscal and taxation system were carried out in the past decade. General Secretary Xi Jinping underscored that good fiscal and taxation systems are the institutional guarantee for optimizing resource allocation, maintaining market unity, promoting social equity and realizing lasting peace and stability. Focusing on building a modern public finance system, the MOF has expedited reforms in key fields. It has deepened reform of the budget management system and introduced a performance-based budget management system covering the whole budget process. It has released reform plans defining the respective fiscal powers and expenditure responsibilities of central and local governments for major sectors. The MOF continued carrying out reforms of value added tax (VAT) and corporate income tax. It took initial steps to establish an individual income tax system based on both adjusted gross income and specific types of income. It also steadily improved local tax systems and promoted reforms of state capital, state-owned enterprises (SOEs) and finance. The MOF has strengthened supervision of financial accounting and tightened fiscal disciplines. As a result, fiscal governance capacity has seen steady improvement.
Financial cooperation was implemented in the past decade. General Secretary Xi Jinping noted that we need to hold high the banners of peace, development, cooperation and mutual benefit, forge a new form of international relations, and promote the building of a community with a shared future for mankind. The MOF has carried out pragmatic cooperation in the financial sector and strengthened multilateral communication using such platforms as the Group of Twenty (G20), BRICS, "1+6" Round Table Dialogue and Asia-Pacific Economic Cooperation (APEC). The MOF proposed establishing the Asian Infrastructure Investment Bank (AIIB), worked to establish the New Development Bank (NDB), and prepared to establish the Multilateral Development Finance Cooperation Center, in a bid to implement the Belt and Road Initiative (BRI). The MOF has taken the initiative and lowered China's overall tariff from 9.8% in 2010 to 7.4%. It also proactively supported the building of high-standard pilot free trade zone (FTZ) networks and worked to introduce a new system of open economy with higher standards.
Ladies and gentlemen, friends from the press, this year is of special significance in the new journey and new era of China as our Party will convene its 20th national congress this year. The MOF will more closely rally around the CPC Central Committee with Comrade Xi Jinping at its core; acquire a deep understanding of the decisive significance of the establishment of both Comrade Xi Jinping's core position on the Party Central Committee and in the Party as a whole and the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; boost our consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment with the central Party leadership; stay confident in the path, the theory, the system, and the culture of socialism with Chinese characteristics; firmly uphold Comrade Xi Jinping's core position on the Party Central Committee and in the Party as a whole, and uphold the Central Committee's authority and its centralized, unified leadership. Bearing in mind the country's most fundamental interests, we will give better play to the fundament and pivotal role of finance in state governance, and continue to implement the proactive fiscal policy under the principle of pursuing progress while ensuring stability in order to serve the overall cause of the Party and the country and set the stage for the 20th CPC National Congress with concrete actions.
Thank you.
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Shou Xiaoli:
Thank you, Mr. Xu Hongcai. Next, I will give the floor to Mr. Wang Daoshu.
Wang Daoshu:
Ladies and gentlemen, friends from the press, good morning. First, please allow me to extend my heartfelt thanks to the friends from the press for your long-term concern and support for the taxation work on behalf of the Party committee of the State Taxation Administration and the head of the administration Wang Jun. We would also like to take this opportunity to express our sincere thanks to the tax and fee payers for their long-term contribution to the country's tax revenue and their understanding and support for the taxation work.
Since the 18th CPC National Congress, historic achievements and changes have been made for the cause of the Party and the country thanks to the efforts of the CPC Central Committee with Comrade Xi Jinping at its core. During the decade, the taxation system has upheld Party leadership and strengthened the building of specialized political staff. We have followed the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; thoroughly studied and implemented the important discourses and instructions of General Secretary Xi Jinping on taxation; acquired a deep understanding of the decisive significance of the establishment of both Comrade Xi Jinping's core position on the Party Central Committee and in the Party as a whole and the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; boosted our consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment with the central Party leadership; stayed confident in the path, the theory, the system, and the culture of socialism with Chinese characteristics; firmly upheld Comrade Xi Jinping's core position on the Party Central Committee and in the Party as a whole and upheld the Central Committee's authority and its centralized, unified leadership. The building of specialized political staff has been continually pushed forward, and Party leadership over the taxation work has been strengthened comprehensively.
During this decade, tax reforms have been furthered comprehensively. The taxation system has thoroughly implemented the major decisions and deployments of the CPC Central Committee and the State Council and worked with the finance department to continue to advance the tax system reform and endeavor to implement law-based taxation at a faster pace. The reform to transfer the responsibility of the collection of social insurance premiums and non-tax revenue was launched in a steady manner. The reform of the administration system for tax collection, which started from a cooperation of different services and moved toward their merging and integration, has led to an optimized, efficient, and unified administration system for the tax system and thus ensured a better play to the fundamental, pivotal and safeguarding role of tax in state governance.
During this decade, the taxation department has borne in mind the big picture and served development. Always committed to doing a good job in managing Party affairs, handling taxation work, and building a good team, the taxation system has achieved marked results in actively serving the overall economic and social development and played an increasingly notable role in serving the state governance system and the modernization of the governance capacity, and the international influence of China's taxation has kept growing. Here I would like to introduce several sets of data to demonstrate the achievements of the taxation department in serving economic and social development during the decade.
The first set of data: During the last decade, the taxation department organized the collection of 110 trillion yuan in tax revenue, providing a solid financial guarantee for high-quality development. The taxation department has all along followed laws and regulations in organizing tax collection and resolutely opposed the excessive collection of taxes and fees. It has fulfilled the targets of budget revenue for years in a row. The national tax revenue collected under the organization of the taxation department rose from 9.5 trillion yuan in 2013 to 15.5 trillion yuan in 2021, not including export rebates, tariffs, and taxes collected in the process of imports. The accumulated total tax collection during the period was 112 trillion yuan, with an average annual growth of 6.8%. The function of tax in contributing to the fiscal revenue has been effectively brought out.
The second set of data: During the last decade, the taxation department handled 8.8 trillion yuan in further tax and fee reductions. China's tax rate decreased from 18.7% in 2012 to 15.1% in 2021. Due to a larger scale of tax and fee reduction in 2019, the tax rate that year was 1 percentage point lower than that of 2018.
The third set of data: During the last decade, the number of new market entities for which we have provided taxation services exceeded 90 million, and the vitality of market entities was effectively unleashed. Since the 18th CPC National Congress, due to the combined effect of a number of macro policies such as tax and fee reduction ones, the innovation and entrepreneurship vitality of the whole society has been constantly stimulated. The number of new market entities for which we have provided taxation services reached 93.15 million, with an average annual addition of over 10 million. The number of general taxpayers of value-added tax rose from 5.44 million at the end of 2015 to 12.38 million at the end of 2021. The effect of tax and fee reductions in nurturing business growth has continued to show.
The fourth set of data: During the last decade, the number of countries and regions covered by China's network of taxation agreements reached 112. The Belt and Road Initiative Tax Administration Cooperation Mechanism, the world's first multilateral taxation platform, was established and ranked by the International Tax Review magazine among its 2021-2022 selection of the most influential events in the tax world.
Ladies, gentlemen, and friends, we know well that the taxation department needs to continue to strengthen efforts in order to meet the people's aspiration for a better life, meet the expectation of the tax and fee payers, and particularly help businesses ease difficulties and serve the big picture of ensuring stability on six key fronts and security in six key areas in the face of the current downward economic pressure. Next, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will continue to strive to do a good job in taxation with stronger determination and tougher measures and in a more solid manner, and set the stage for the 20th CPC National Congress with concrete actions. Thank you.
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Shou Xiaoli:
Thank you, Mr. Wang Daoshu. Next, the floor goes to Mr. Wang Lujin.
Wang Lujin:
Good morning, everyone! First of all, I would like to thank friends from the media for your care and support for our auditing work.
Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at its core has attached great importance to auditing. With a focus on the overall development of the Party and our country, reforms have been taken in the auditing management system, the audit system has been improved, and the significant role of auditing work in the Party and the country's supervision system has been given full play. Now, I would like to give a brief introduction to the achievements we have made in the following three aspects:
First, the CPC Central Committee's overall leadership over the auditing work has been strengthened, pushing us to achieve the constant and new progress in building an audit-based oversight system that is centralized, unified, authoritative, efficient and with complete coverage. At the 19th CPC National Congress and the 19th CPC Central Committee's third plenary session, decisions were made to reform the auditing management system, and the central auditing committee was established. These efforts have effectively strengthened the top-level design, overall planning, and coordination, progressing on all fronts, overseeing the execution of major work in the auditing field, and giving better play to the work of the audit-based oversight.
Second, bearing in mind the country's most fundamental interests and focused on the central work of the Party and the country, we have made constant and new progress in reinforcing the audit-based oversight. The auditing organs at all levels have firmly implemented the decisions and deployments of the CPC Central Committee and the State Council, followed the principle that "the audit-based oversight is first and foremost economic supervision," and fully performed their duties of the audit-based oversight in accordance with the law. Over the past 10 years, more than 1.09 million units across the country were audited, resulting in an increase in revenue and decrease in expenditure, and over 4.3 trillion yuan of losses recovered.
Third, the audit team has been managed strictly to promote the self-building of the audit and make sustainable and new progress. The auditing organs at all levels have adhered to the political guidance and requirements throughout the whole process of auditing, followed the principle of carrying out the auditing work in accordance with law and being objective and fair, strived to shape the professional spirit of daring to take on responsibilities and build the professional ability with solid and excellent expertise, and been able to ensure to seek for the truth, tell the truth and report the actual situation.
Carrying out supervision of the financial auditing work is a fundamental responsibility given by the Constitution of the People's Republic of China and the Audit Law of the People's Republic of China to audit authorities. Over the years, we have prioritized the financial auditing work and continued to intensify our efforts in the audit of the implementation of fiscal policies and the management and use of fiscal funds. We have promoted the in-depth reform of fiscal and taxation systems, strengthened the overall planning of fiscal resources, and improved the effectiveness of the use of fiscal funds. With these endeavors, we will bolster financial support for major strategic tasks of the country.
At present, due to the impact brought by the COVID-19 and many other factors, our country is pursuing its economic development in an environment of increasing complexity, severity, and uncertainty. Thus our economy is facing new challenges. The auditing organs across the country will firmly implement the decisions and arrangements of the Party Central Committee and the State Council and adhere to the principle of making stability our top priority and pursuing progress while ensuring stability. We will solidly perform our duties of audit-based supervision, promote the efficiency of proactive fiscal policies, and do a good job in ensuring the "six stabilities" and the "six guarantees" to achieve stable macroeconomic performance and keep major economic indicators within the appropriate range. These efforts will enable us to pave the way for a successful 20th National Party Congress.
That's all I want to say. Thank you.
Shou Xiaoli:
Thank you for your introduction, Mr. Wang. Now the floor is open for questions. Please identify the media outlet you represent before raising questions.
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Southern Metropolis Daily:
Could you tell us what achievements have been made in China's continuous tax and fee reduction efforts over the past decade? Facing the current downward pressure on the economy, what new tax and fee-related measures will be introduced by the finance departments, and how will the taxation departments ensure that these tax and fee reduction measures are implemented? Moreover, how about the situation of the implementation of the new package of tax-and-fee supporting policies this year? Thank you.
Xu Hongcai:
Thank you for your questions. Since the 18th CPC National Congress, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, and in accordance with the requirements of handling taxes in a scientific way, optimizing the structure, improving relevant laws, and fostering a procedure-based fair system, the finance departments have continued to deepen the reform of the tax system and promote tax cuts and fee reductions.
First, we have continued to deepen the value-added tax reform ensuring that tax burdens went down in all industries. In 2012, we introduced the trials to replace business tax with VAT. In 2016, the trials were practiced in all sectors of society. In 2017, the 13%-tax-rate was canceled, and the structure of VAT rates was simplified from the four tax brackets into three. In 2018 and 2019, the VAT rates continued to decrease, and the standard tax rate of 17% was reduced to 13%. Meanwhile, we have increased business VAT deductions, and established a system to refund end-of-tax-period VAT credit. While having basically established a modern VAT system, we ensured that tax burdens in all industries were reduced instead of increased, significantly easing the tax burden on taxpayers.
Second, we have improved the corporate income tax system and supported the innovative development of enterprises. We have implemented preferential tax policies covering all aspects regarding innovation, including venture capital, innovators, and R&D activities. In particular, we have continued to enhance the policy on granting additional tax deductions for R&D costs and focused on fostering new drivers of economic growth.
Third, we have implemented the individual income tax reform and lowered the tax burden on low-and-middle-income groups. Such efforts include raising the individual income tax threshold, clarifying the scope of gross income tax collection, setting up special additional deductions, and improving and adjusting the tax rate structure. Thanks to these efforts, we have established a system for taxing personal income based on both adjusted gross income and specific types of income.
Fourth, we have steadily promoted the reform of other taxes and improved the modern tax system. These efforts include improving the consumption tax system, promoting the reform of the resource and environmental tax system, and improving the local tax system, among others.
Generally speaking, in the past decade, our tax system reform has the following three features:
First, we have kept firmly in mind the major decisions and arrangements of the Party Central Committee and served the major national strategies. We have paid equal attention to both improving the tax system and the tax reduction to bolster high-quality social and economic development. Newly added tax and fee cuts between 2013 and 2021 totaled 8.8 trillion yuan, which helps reduce the financial burden on market entities and accelerate their development.
Second, we have always pushed to see that our tax system reform becomes better matched with the external environment of economic globalization and strived to build a community with shared interests. We have focused on the development trend of the international tax system, introduced a series of reform measures to promote inclusive growth and a green tax system, actively participated in the research and formulation of international tax rules for the digital economy, and effectively safeguarded China's tax interests. With such efforts, China's overall tariff rate has been cut from 9.8% in 2010 to 7.4%.
Third, we have been focused on the development of a standardized and law-based taxation system. A modern taxation system has taken shape, with taxation playing an increasingly significant role in national governance and the structure of the taxation system continuously optimized. In 2021, the national tax revenue totaled 17.3 trillion yuan, accounting for 85.5% of the revenue in the national general public budget. In 2021, the share of direct taxes stood at 36%. In addition to the domestic tax revenue, the national tax revenue of 17.3 trillion yuan I mentioned also includes customs duties and taxes.
Acting in accordance with the decisions and plans of the CPC Central Committee and the State Council, we will carry out new combined supporting policies through tax and fee cuts. Tax refunds and cuts this year are expected to total 2.5 trillion yuan, and 1.5 trillion yuan of this sum will come from VAT credit refunds on a large scale, which will be realized after the introduction of new policies. The MOF will work with the State Taxation Administration and other relevant departments to accelerate the implementation of the VAT credit refund policies to improve the cash flow of enterprises and ease their burdens and difficulties through solid measures.
Next, the MOF will fully implement supporting policies through tax and fee cuts. We will promote the implementation of the policies of VAT credit refunds for large enterprises; micro and small enterprise are covered by the policies as well. We plan to carry out the policies for large and medium enterprises in advance. By accelerating the implementation of the policies, we will ensure our policies bring benefits to enterprises as soon as possible to ease their burdens and difficulties, strengthen internal momentum for development, and keep the major economic indicators within the appropriate range. Meanwhile, under the guiding principles of the meeting of the Political Bureau of the CPC Central Committee, we will make plans proactively on additional policy tools to bolster domestic demands.
Thank you.
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Wang Daoshu:
I could add on to that. Since the 18th CPC National Congress, the CPC Central Committee and the State Council have made efforts to reduce taxes and fees, considering this goal as an important part of deepening supply-side structural reform, planning and implementing an array of tax and fee reduction policies. These policies are implemented on a large scale and cover a wide range of entities previously unseen. They also have played a crucial role in easing the burdens of and energizing market entities.
Fully implementing General Secretary Xi Jinping's instructions and acting in line with the CPC Central Committee and the State Council's decisions and plans, the State Taxation Administration has taken and fulfilled the political responsibility for tax and fee reduction and adopted an innovative approach, i.e., adhering to one guidance, strengthening nationwide coordination, acting in accordance with one timetable, implementing the policy thoroughly, providing one package of services, answering questions from one authority, adopting one measurement, practicing integrated supervision, and uniting as one. We ensure that taxpayers can get tax and fee policies by scanning a QR code, while government services such as consultancies can be accessed online or through cellphone apps to ensure that the benefits of tax and fee reduction policies go straight to market entities fast and efficiently.
Since the start of this year, the CPC Central Committee and the State Council have rolled out new combined supporting policies through tax and fee cuts. As Mr. Xu has mentioned, the tax and fee reductions this year are expected to reach 2.5 trillion yuan, of which the VAT credit refunds will account for 1.5 trillion yuan. Focusing on the critically important policy of tax refunds and cuts on a large scale this year and implementing the requirements of providing high-quality, accessible, and convenient services, adopting a scientific and preventative approach to review enterprises' qualification for VAT credit refunds, harshly combating tax fraud, strictly conducting self-examination, continuously promoting policies, and providing fast, targeted, stable, and quality services, the taxation administrations nationwide have upgraded the information system 12 times and improved the application of contactless online taxation administration websites and apps to ensure faster and more efficient refunds amid the COVID-19. We have launched actions where top officials of the taxation administrations at provincial, municipal, and prefectural levels have taken charge of services directly to give immediate response to taxpayers' appeals. This will help take quick actions to tackle problems once they are spotted, removing the last crucial hurdle for implementing the policies so that taxpayers can enjoy efficient and convenient services. Targeted and immediate actions have been taken to crack down hard on tax fraud. From April 1 to May 16, 2,880 enterprises suspected of defrauding VAT credit refunds have been filed and inspected, and 118 related cases have been publicly exposed nationwide, sending a strong signal that tax fraud will be harshly combated and violators will be strictly punished, while also ensuring that no lawbreaker would take advantage of the tax and fee reduction policies. At the same time, a total of 25 cases of dereliction of duty by tax officials have been exposed, especially the very few cases of tax collusion that have been filed for review, showing that we punish corruption with an attitude of zero tolerance and keep firmly in mind the old adage that it takes a good blacksmith to make good steel.
Concerning the implementation of the new combined supporting policies through tax and fee cuts, as Mr. Xu has mentioned, this year, we have cut taxes and fees and increased cash flow for enterprises by 1.6 trillion yuan, consisting of three parts. First, from April 1 to May 16, a total of 979.6 billion yuan of VAT credit refunds were returned to corporate accounts, in addition to 123.3 billion yuan in refunds from last quarter when the previous VAT credit refund policies were carried out. This year, a total of 1.1 trillion yuan in refunds have been returned to taxpayers' accounts. Second, China introduced more tax and fee reductions in the first quarter, which amounted to 198 billion yuan. Third, 377.8 billion yuan of tax payments were postponed for micro, small, and medium enterprises (MSMEs) in manufacturing. These policies' benefits have played an important role in solving difficulties and rekindled confidence for enterprises, especially MSMEs and self-employed individuals.
Thank you!
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CCTV:
Recently, some local governments released their fiscal revenue data for April, and the decline was relatively large. How was the national fiscal revenue and expenditure data, please? Thank you.
Xu Hongcai:
Thank you for your question. I will answer it. Everyone is very concerned about this issue, and I will elaborate on the situation.
Following the decisions and arrangements of the CPC Central Committee and the State Council, a new package of tax-and-fee policies was implemented this year. As I said earlier, and Mr. Wang also said just now, this year's tax rebates and cuts are expected to reach 2.5 trillion yuan, among which VAT credit refunds will be 1.5 trillion yuan. On the one hand, this is strong support for enterprises to reduce their burdens and bail them out of difficulties; on the other hand, it will cause a decrease in fiscal revenue. In accounting, our tax rebates are handled by offsetting revenue, rather than by utilizing financial subsidies or increasing financial expenditures. Therefore, Mr. Wang just mentioned that the figure of VAT credit refunds is to be written off based on the existing fiscal revenue. April was the first month for the implementation of large-scale VAT credit refunds. The policy effects were released in a concentrated manner. Enterprises were very active, and tax departments also worked very hard. Over the month, the national VAT credit refunds amounted to about 800 billion yuan, quite beyond our expectation. The 800 billion yuan was treated as a deduction from fiscal revenue, so what's the proportion if compared with the previous year? We compared it with the fiscal revenue in April 2021, and found that 800 billion yuan were equivalent to 37.5% of that month's revenue. That is to say, with the implementation of VAT credit refunds, the revenue in April would drop 37.5%, which is calculated for the whole country. The drop will be more significant in regions with advanced manufacturing, especially in some eastern provinces. That is to say, it will exceed 37.5%. Due to the large impact of VAT credit refunds, the fiscal revenue from January to April cannot be compared with that of the previous year. Of course, in addition to VAT credit refunds, we also have other tax and fee reductions. I just mentioned 1.5 trillion yuan in VAT credit refunds, and there are 1 trillion yuan in additional tax and fee reductions. These tax cuts and some tax deferral measures will also have an impact on the fiscal revenue in the January-April period.
After deducting the 800 billion yuan of VAT credit refunds, the national fiscal revenue increased 5% in the first four months, which was lower than the increase (8.6%) during the January-March period.
In terms of tax types, from January to April, the accumulated domestic VAT increased 1.8% after deducting VAT credit refunds; the domestic consumption tax grew 15.5%; the VAT and consumption tax of imported goods — the VAT and consumption tax collected by the customs — increased 17.8%; the corporate income tax grew 5.4%; and the export tax rebates were 153.3 billion more than the first four months of last year, an increase of 28.4%.
From January to April, expenditure in the national general public budget increased 5.9% over the same period last year, accounting for 30.3% of the budget. Expenditures in key areas such as people's livelihood have been effectively guaranteed. The essential expenditures in science and technology, agriculture, forestry and water conservancy, health, social security and employment, and education increased 15.5%, 12.9%, 7.5%, 4.4%, and 4.1%, respectively. What needs to be pointed out, in particular, is expenditure on the issuance of special bonds in the budget of government-managed funds. The issuance of local government special bonds totaled 1.11 trillion yuan, an increase of 1 trillion yuan over the same period last year. This has played a positive role in expanding effective investment and effectively stabilizing the macroeconomic market. This is the situation in the entire country.
From a local perspective, after deducting VAT credit refunds, local fiscal revenue increased 5.4% during the January-April period. Among the 31 provinces (autonomous regions and municipalities), 23 saw increases and 8 witnessed declines.
Of course, it should also be noted that VAT credit refunds will bring a reduction in local fiscal revenue. Although we just calculated and compared it in fiscal statistical methods and dimensions, implementing VAT credit refunds will definitely cause a reduction in local financial resources. For this part of the reduction, the central government makes up for it through transfer payments, and this has been basically compensated. Therefore, local financial resources can be effectively guaranteed.
We have also analyzed the status of the central and local treasury funds, and I would like to talk a little bit about it. The national treasury balance was 4.94 trillion yuan as of the end of April. The balance of this treasury is the money received from the fiscal year minus the money spent, then we have the remaining balance. Of course, this money also excludes VAT credit refunds to enterprises. The total national treasury balance was 4.94 trillion yuan, an increase of about 440 billion yuan or 9.6% compared with the end of April last year. The balance of local treasury funds was 4.56 trillion yuan, an increase of about 500 billion yuan or 12.2% over the same period last year.
In general, the growth rate of fiscal revenue declined in April, as the fiscal and taxation departments at all levels have stepped up efforts to implement the tax reduction and rebate policies of the CPC Central Committee and the State Council. This is an active act of the proactive fiscal policies to deal with the downward pressure on the economy. By subtracting from fiscal revenue, we aim for more corporate benefits and the multiplication of market vitality. At the same time, the fundamentals sustaining China's steady and long-term economic growth remain unchanged. While the coordination of epidemic prevention and control and economic and social development starts to show its effects, fiscal revenue will also rise steadily.
Next, the MOF will continue to thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council on tax rebates and cuts. We will formulate fiscal policies early on, make good use of various policy tools, and act in advance so as to stabilize the macroeconomic market and keep the economy operating within a reasonable range. Thank you.
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Thecover.cn:
This question goes to Mr. Wang Lujin. We know that financial auditing is the fundamental responsibility of auditing organs. Could you please give a detailed introduction of the achievements that the auditing organs have made in promoting the reform of the finance and tax systems, improving the efficiency of the use of the fiscal funds, as well as the efforts it has made to ensure the implementation of the eight-point decision on improving Party and government conduct and to ensure the government keeps its belt tightened? Thank you.
Wang Lujin:
Thank you for your question. The priority of the audit authorities is the auditing of public finance.As such, financial auditing is the most important task for which the National Audit Office always strives. Since the 18th CPC National Congress, following the decisions and deployments made by the CPC Central Committee and the State Council, auditing organs have been committed to the prominent task of ensuring genuine, legitimate, and efficient financial revenue and expenditure and stepped up efforts to enhance and improve fiscal audit, conduct audit-based oversight, and promote the reform and progress of the finance and tax systems. I'd like to brief you on the following three aspects:
First, we have endeavored to boost the fiscal system reform. Aiming to put in place a comprehensive, procedure-based, transparent budget system that follows well-conceived standards and imposes effective constraints, we have strengthened budget performance and audit of draft final accounts. We have also expanded audits of department budget implementation and strengthened the audit of prominent and special funds. By doing so, we have been able to supervise the entire government budget system, which includes budget allocation, approval, implementation, revision, and the compilation of final accounts so as to ensure a complete and unified government budget system. With the aim of establishing a relationship between the central and local finances built upon clearly defined powers and responsibilities, appropriate financial resource allocation, and greater balance between regions, we have motivated the central and local governments and promoted audit of transfer payments, wherein we have endeavored to ensure that the items eligible for transfer payments are established properly; that the share of fiscal funds between the central and local governments are rational; that the fiscal funds are allocated correctly; that the approval of the budget and appropriation of funds are timely; and that the funds are used efficiently and consistently with compliance requirements. Such efforts are conducive to balancing financial resources and basic public services among regions.
Second, we have made great efforts to improve the efficiency of the proactive fiscal policies. In order to ensure the implementation of proactive fiscal policies, we have strengthened the audit of performance management of fiscal funds, the process of putting idle budgetary funds to good use, and the issuance of local government special-purpose bonds in a bid to improve the efficiency of funds. I'd like to introduce our work in two aspects: The first is about the audit of direct finances. The central government has established a system for the transfer of finances in a bid to allocate the funding to local governments directly. In this regard, auditing organs have inspected every single step throughout the entire process over the past few years, including the allocation, the appropriation, as well as the management and the use of the funds in order to ensure that such fiscal funds will be allocated and distributed in time; that the use of the funds is target-oriented; and that it will be managed in a safe and efficient manner. According to the audit results, the system has enabled fiscal funds to be allocated more quickly, distributed in a targeted way, and supervised more effectively. It has played an important role in advancing stability on the six fronts and security in the six areas, ensuring economic stability and social development. The second is about the audit of the special-purpose bonds. We have strengthened the audit of local government special-purpose bonds in terms of their lend, use, management, and repay so as to ensure the management of special bonds more standard in terms of its quota allocation, declaration, and release, as well as its use and debt repayment. It is also conducive to increasing the benefits brought about by the use of special-purpose bonds, which will thereby further leverage the positive role of special-purpose bonds in improving the efficiency of proactive fiscal policies and expanding effective investments.
Third, we have made great efforts to ensure the implementation of the eight-point decision on improving Party and government conduct and ensure the government keeps its belt tightened. Since the18th CPC National Congress, the audit authorities has made the implementation of the eight-point decision on improving Party and government conduct and the requirement of tightening the belt as a top priority of the audit-based oversight, investigating, and taking stern action in practices regarding the construction of new government buildings and vanity projects in violation of regulations, as well as the release of subsidies in violation of regulations and mismanagement of spending on official overseas visits, official vehicles, and official hospitality.
For example, the General Office of the State Council reported in October of last year some cases of the construction of new government buildings and vanity projects in violation of regulations in some regions despite their financial situation. It urged localities and departments at all levels to raise awareness and conduct self-inspection and self-correction to learn a lesson, demanding them to strictly enforce financial and economic discipline and tighten up accountability for overseeing discipline compliance, which thereby has created a deterrent. Going forward, we will ramp up efforts to investigate similar problems.
Thank you.
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CNR:
Since the 18th CPC National Congress, what efforts have the tax authorities made in terms of implementing the new development philosophy and leveraging the role of tax policies in order to promote high-quality economic and social development? What achievements have been made? Thank you.
Wang Daoshu:
Thank you for your question. Since the 18th CPC National Congress, the tax authorities have implemented General Secretary Xi Jinping's important remarks on tax work and have practiced the new development philosophy featuring innovation, coordination, green, openness and sharing in a full, accurate, and comprehensive manner so as to ensure that the tax work will serve the overall economic and social development and promote high-quality economic and social development.
First, we are keeping focus on innovation to drive growth. A series of policies have been adopted to support scientific and technological innovation, such as the preferential income tax rate for high-tech enterprises, the R&D expense super deduction policy with broader coverage, and higher deduction rates and accelerated depreciation for fixed assets, all of which spur enterprises to increase their investments in science and technology. In 2020, a total of 53,000 enterprises enjoyed the preferential tax policies for high tech firms, an increase of 82.8% in terms of numbers compared with the level of 2013, with enterprises' income tax deduction and exemptions reaching 259.6 billion yuan. In 2020, 427,000 enterprises enjoyed the R&D expense deduction policy, and the amount of tax deduction and exemption was 429.5 billion yuan, which was 1.9 times the amount of 2013. Enterprises have become more vigorous for innovation, and their R&D intensity has increased from 2.08% in 2013 to 2.44% in 2021.
Second, we are focusing on coordination to serve the regional development strategy. The administration has set up a group on taxation work to consistently implement preferential tax and fee policies to promote large-scale development in the west region and support the construction of the Hainan Free Trade Port. We have launched multiple facilitation measures for the integration of the tax collection and services to support the integrated development of the Beijing-Tianjin-Hebei region, the development of the Yangtze Economic Belt, and the integrated development of the Yangtze River Delta, thus vigorously enabling regions to complement each other with their respective strengths and facilitating flows of factors of production. From 2016 to 2021, tax revenue's average annual growth rate in the central and western regions was 6.8% and 5.8%, respectively, 1.2 percentage points and a 0.2 percentage point higher than the overall annual growth rate in the eastern region. The proportion of tax revenue in the central and western regions has increased, reflecting a more coordinated development among regions.
Third, we will keep focusing on green development to help build a beautiful China.By thoroughly implementing Xi Jinping Thought on Ecological Civilization, the administration has established a green tax system featuring the governance of multiple taxes such as resources tax, environmental protection tax, consumption tax, and enterprise income tax. We have introduced tax incentives while offering tax restriction measures simultaneously. Since the introduction of the environmental protection tax in 2018, the pollution equivalent per 10,000 yuan of GDP decreased from 1.16 in 2018 to 0.86 in 2020.
Fourth, we are focusing on opening-up to promote international economic and trade cooperation. Since 2013, the administration has accelerated the negotiation, signing, and revision of tax treaties with key countries, and carried out consultations with tax authorities in relevant jurisdictions, thus eliminating 28.3 billion yuan of double taxation for taxpayers and effectively lowering the tax burden on enterprises. The time for processing export tax rebates was reduced to less than seven working days in 2021. From 2013 to 2021, a total of 10.6 trillion yuan of export tax rebates was granted to enterprises, with an average annual growth rate of 6%, thus stabilizing foreign trade. The policy of deferred tax payment for foreign reinvestment has been earnestly carried out. Since its implementation in 2018, 41.3 billion yuan of deferred tax payment has been handled, which has driven 426.4 billion yuan of dividends reinvestment, thus promoting foreign investment.
Fifth, we will keep focusing on shared benefits to improve people's well-being. The administration has strengthened the policy of giving priority to employment and continued to increase tax support for small and micro-businesses. The VAT threshold for small-scale taxpayers has continuously increased from 30,000 yuan to 150,000 yuan, and the income tax threshold for small and low-profit enterprises has been lowered several times in a row. We have continued to implement policies of starting businesses and finding jobs for key groups, reduce the burden on market entities, and sustain employment and create jobs. With the implementation of the individual income tax reform, the tax burden of hundreds of millions of natural person taxpayers has been significantly reduced. Most taxpayers with an annual income of less than 100,000 yuan do not need to pay individual income tax.
China's economic and social development is under great pressure due to the resurgence of the epidemic and changes in the international situation. We will give full play to the role of taxation in raising fiscal revenue, regulating the economy, adjusting the distribution, and integrating taxation more deeply into all aspects of national governance. The taxation department will bravely shoulder responsibilities and overcome difficulties, firmly keep the economy stable, effectively protect and improve people's livelihoods, stabilize and expand employment, and contribute to high-quality economic and social development. Thank you.
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CNBC:
My question is about the increase of 1.5 trillion yuan in transfer payments from the central to local governments proposed in the government work report of this year. Will this number increase further? How much will it be? Thank you.
Xu Hongcai:
Thank you. I will answer your question concerned by local governments.
According to the central budget approved by the National People's Congress, transfer payments from the central to local governments will reach about 9.8 trillion yuan in 2022, an increase of nearly 1.5 trillion yuan or 18 percent over the previous year. Among them, regular transfer payments reach 9 trillion yuan, with a rise of 8.4 percent, a relatively high rate in recent years. We divide it into general transfer payments and special transfer payments. The former will reach 8.2 trillion yuan, up 8.7%, and the latter will reach 0.8 trillion yuan, up 4.7%. The increase in general transfer payments is higher, indicating that more transfer payments can be pooled and used by local governments compared with the special transfer payments.
Besides regular transfer payments, the rest of 800 billion yuan will be allocated to support local governments in implementing tax rebates policy, other tax and fee cuts, and increasing spending on key areas related to people's well-being.
In addition to the above-mentioned transfer payments, we have also allocated 400 billion yuan of government-managed funds to be carried over next year to clear the tax refunds borne by the central government and increase the amount of transfer payments to local governments accordingly. At present, most of the transfer payment funds have been distributed to local governments in accordance with the law, of which 4 trillion yuan has been included in the normalized direct mechanism management. This is the case with budgetary arrangements. The refund process is relatively fast, so it is estimated that some liquidation funds originally planned to be carried over next year will be distributed to local governments in advance, thus meeting the needs of fund allocation at the local level.
Next, based on implementing the existing policies, we will fully carry out the decisions and plans of the CPC Central Committee, promptly design and use new incremental policies, enhance well-timed regulation, properly adopt target-oriented policies in advance and leave enough space, so as to make solid progress. We will work hard to achieve the goals of economic and social development throughout the year and keep the economy running within an appropriate range.
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Haibao News:
The third plenary session of the 18th CPC Central Committee made it clear that China should advance the reform of the fiscal and tax systems to build a modern public finance system. How is the reform of China's fiscal and tax systems progressing? What new reform measures will be rolled out this year? Thank you.
Xu Hongcai:
Thank you. Your questions are about reforms. Indeed, our reforms in recent years have been advanced according to decisions and arrangements of the CPC Central Committee and the State Council. Especially since the third plenary session of the 18th CPC Central Committee, we have taken moves across the board, achieved breakthroughs in many areas, made further progress and achieved remarkable results. The framework of a modern public finance system has been basically established to provide strong support for promoting the sustained and healthy economic and social development and modernizing China's system and capacity for governance.
First, new progress has been made in the reform of fiscal systems. A fiscal relationship between the central and local governments built upon clearly defined powers and responsibilities, with appropriate financial resource allocation and great balance between regions, has gradually taken shape. We kept the current fiscal pattern of central and local governments stable, advanced the reform of defining the respective fiscal powers and expenditure responsibilities of central and local governments, and unveiled reform plans involved in 11 areas, including basic public service, education, and science and technology. We further rationalized the division of revenue between central and local governments, clarifying the ‘50/50 split' for VAT revenue, and adjusting and improving the mechanism for sharing VAT credit refunds. We deepened the reform of the financial transfer payment system and built a system for transfer payments, including general transfer payment, transfer payment of common authority of central and local governments, and special transfer payments, which has promoted coordinated regional development and equal access to basic public services.
Second, significant progress has been made in reforming the taxation system. A standardized and fair taxation system, featuring scientific tax classifications, optimized structure, and sound laws, was built and improved. I spoke more about the taxation system in my first answer. Generally speaking, we have intensified efforts to administer taxation in accordance with the law and completed legislative work on 12 tax categories. Moreover, we have comprehensively advanced VAT reform, improved systems of consumption tax and business income tax, and advanced the reform of resources and environment taxation system. A system for taxing personal income on the basis of both adjusted gross income and specific types of income has taken shape, and large-scale cuts on taxes and fees have been implemented.
Third, major achievements have been made in reforming the budget management system. A transparent budget system has been basically established with clearly defined, evidence-based and binding rules. In the past decade, the Budget Law and the regulations on implementation of the Budget Law were revised and decisions and opinions on deepening reform of the budget management system were released. A multi-year budget-balancing mechanism was established and medium-term financial planning management was implemented. We strengthened the united management of fiscal revenue, standardized the management of expenditure budgets, and strengthened financial support for major decisions and arrangements. We strengthened budget management of government departments and units and implemented lifecycle management of projects. We innovatively implemented a mechanism to directly allocate budgetary funds to prefecture- and county-level governments to ensure that funds go straight to prefecture and county governments and directly benefit businesses and people. Moreover, we strengthened management of local government debt, advanced performance-based budget management across the board, made institutional arrangements to make budgets more transparent, and comprehensively implemented a reporting system for state-owned asset management.
Next, we will continue to follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, ground our efforts in the new development stage, apply the new development philosophy, and create a new pattern of development. In accordance with the requirements of systematic integration and efficient coordination, we will advance reform of the fiscal and tax systems to make finance better play its role as the foundation of state governance and promote high-quality development.
Thank you.
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Sansha Satellite TV:
Since the 18th CPC National Congress, what have taxation authorities done to improve tax services and improve the taxation environment? Focusing on alleviating the burden on businesses, stimulating market vitality, and improving the business environment, with which taxpayers are concerned, what new measures will be introduced and what are the priorities this year? Thank you.
Wang Daoshu:
I will answer your questions. Thank you for your interest in this field.
The taxation authorities serve tens of millions of enterprise taxpayers and self-employed individuals, hundreds of millions of natural person taxpayers, and more than one billion payers. The taxation department is one of the government departments which have the closest contact with market entities, serve the people most directly and have the most frequent contact with the people. Since the 18th CPC National Congress, taxation authorities have focused on dealing with the blockage, difficulties, and pain points reflected by taxpayers, promoted the transfer from focusing on offline tax services to equal attention to both online and offline tax services, from focusing on general service to more personalized services, and the quality and efficiency of tax and fee services have been improved. According to the Doing Business Report released by the World Bank, China's taxation index rank has been rising, and its score in a third-party survey on taxpayer satisfaction has steadily improved, increasing to 87.2 in 2021 from 79.72 in 2012.
Next, I will elaborate on this from the following three respects:
First, we have improved our service philosophy to make tax services more comprehensive. Focusing on taxpayers, we have worked hard to provide convenience and regulate the service philosophy of tax collectors to the maximum and improved tax and fee services.
Second, we continued to improve tax service, making it more convenient. Taxation authorities have launched public tax service campaigns since 2014 for nine consecutive years, and made continuous achievements. We introduced 539 innovative service initiatives, involving 197 items of 54 categories. We streamlined tax materials, reducing material submission by 50% and paper forms by 25%. Matters requiring tax administrative approval were reduced to one from 87, more than 95% of preferential tax treatment items have been changed into ‘for future inspection' from record and the efficiency of tax and fee policies was improved. Particularly when facing the epidemic in 2020, we vigorously promoted non-contact tax payment services and made it a regular practice. In addition to those matters prescribed by the law and those that require offline physical delivery, all tax payment matters are handled without contact, social security payment for enterprises is handled online, and social security payment for individuals is basically handled via cellphone applications.
Third, we have continuously taken innovative measures to protect people's rights and interests to reassure them about paying taxes. We have always regarded protecting taxpayers' legitimate rights and interests as an essential component of our taxation services, actively responded to taxpayers' legitimate rights and interests, and strived to build a fair and equitable taxation environment. We have also continuously worked to improve the complaint mechanism. Compared with 2012, the number of complaints submitted to the taxation department has fallen by 20.4% in 2021. The average time for handling all kinds of complaints was also cut by 50%. We have continued to enforce the law in a strict, procedure-based, impartial and civilized manner. Since 2019, based on pilot programs, we have comprehensively implemented the administrative law enforcement publication system, the recording system of law enforcement throughout the whole process and the legal review system of major law enforcement decisions, in a bid to create a transparent, standardized and law-based taxation environment.
Since the beginning of this year, faced with the pandemic and complicated international situations unseen in a century, the environment for China's economic development has become more complex, severe and uncertain, while more challenges including stabilizing economic growth and commodity prices and promoting employment have been posed to China. The taxation department will work together with large market entities to overcome the difficulties and further carry out theSpring Breeze Campaign for More Convenient Taxation Service, facilitating the development of small- and medium-sized enterprises. We are committed to basically completing implementation of end-of-tax-period VAT credit refunds on a large scale by the end of the first half of this year and thoroughly implementing preferential tax policies, in a bid to ease the burdens and difficulties faced by large market entities, and especially for micro-, small- and medium-sized enterprises, and to play our part in advancing stability on the six fronts and security in the six areas. Thank you.
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Beijing Office of Changjiang Daily:
There is no trivial matter when it comes to people's livelihoods. I would like to ask, over the last few years, what measures have been taken by the National Audit Office to strengthen livelihood funding and audit projects to improve people's standard of life? What achievements have been made? Thank you.
Wang Lujin:
Thank you for your questions. Since the 18th CPC National Congress, the auditing sector has always upheld the people-oriented development concept, regarded achieving, safeguarding and improving the fundamental interests of the people as the starting point and objective in our work, and deemed safeguarding and making good use of livelihood funds as our most important commitment to the public. We have continuously advanced auditing efforts in major fields related to people's livelihoods, including health care, elderly care, employment, housing and agriculture, rural areas and farmers. We have insisted on reaching the grassroots level, conducting thorough supervision of funds and the implementation of policies, in a bid to ensure that all policies for benefiting the people rolled out by the CPC Central Committee can be fully implemented. We have seriously investigated and penalized cases of corruption and misconduct occurring among the people, better addressed the pressing difficulties and problems that are of the greatest concern to the people, met people's basic living needs, and increased people's senses of fulfillment, happiness and security. I will briefly introduce our achievements from two aspects.
First, I will introduce the auditing situation for poverty alleviation and rural revitalization. We have adhered to all the decisions and arrangements made by the CPC Central Committee, taken winning the battle against poverty as our top task, coordinated and arranged for best cadres from across the country to work on the front lines, and continuously strengthened auditing in the field of poverty alleviation. Over the past few years, we have randomly inspected a total of 1.02 trillion yuan worth of various kinds of poverty reduction funds. We have promoted the normalization process of poverty reduction fund management and constantly improved its in-use performance with the percentage taken up by invalid funds out of the total inspected funding reduced from 36.3% in 2013 to 1.5% in 2020, playing our part in winning complete victory in the fight against poverty. Since last year, in accordance with the arrangements and requirements made by the CPC Central Committee and the State Council, we have continued to do a good job in implementing relevant policies and fund auditing in order to better connect the work of consolidating and expanding the achievements of poverty alleviation with the efforts on rural revitalization. We have continuously stepped-up auditing efforts in stabilizing supportive policies and consolidating progress of the "two assurances and three guarantees." During the five-year period of transition after completing all tasks of poverty alleviation in particular, we have conducted audits at every administrative level through the whole process of the use of funds that aim to consolidate poverty alleviation achievements. We have accelerated the construction of a long-term mechanism to protect the fruits of comprehensive poverty alleviation and to ensure that people do not slip back into poverty in large numbers.
Second, I will introduce the auditing situation for social insurance. In accordance with the multi-tiered social insurance system in China, we have organized auditing forces across the country to continuously audit pension funds, medical insurance funds, employment subsidies, public welfare lottery fund, government-subsidized housing projects and so on, in a bid to the safeguard the security of funds in all fields of social insurance and facilitate the implementation of major policies such as those aimed at promoting employment. During the auditing process, we have put greater emphasis on the security of funds, revealing and cracking down on illegal activity such as insurance fraud, hedging, embezzling or graft of all kinds within social insurance funds. We have also emphasized fund benefits, addressing all kinds of problems related to inefficiency such as idle funds, accrued liabilities and excessive security. In addition, we have paid attention to the consistency of policies, removed choke points, difficulties and breaking points throughout the implementation process of mechanisms and policies, and shored up weak links in social insurance, in a bid to let our people across the country benefit more and in a fairer way from reform and development outcomes. Thank you.
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Beijing Daily:
At present, faced with the downward economic pressure in China, I would like to ask, what progress has been made recently by the steady-growth-oriented fiscal and taxation policies? And what measures will be taken going forward? Thank you.
Xu Hongcai:
Thank you for your questions. Since the beginning of this year, the MOF has earnestly implemented the spirit of the Central Economic Work Conference. In accordance with the arrangements of the Report on the Work of the Government, we will prioritize stability while pursuing progress and focus on stabilizing crucial links such as employment, investment, market entities, industrial chains and supply chains. We will step up efforts in multiple aspects, implement comprehensive policies and make these policies produce effects sooner, so as to help achieve a stable macroeconomic performance. In addition, we will launch a set of new policies for cutting taxes and fees to further alleviate burdens on companies and increase the momentum of market entities. We plan to maintain an appropriate level of spending intensity, further optimize the financial expenditure structure, comply with the requirement that government should keep its belt tightened and keep spending low to benefit the people, and strengthen guarantees of key fields and the basic well-being of people. Meanwhile, we will arrange the issuance and use of special local government bonds in a reasonable manner, guarantee the construction of key projects, strengthen central government's transfer payments to local governments and guide the flow of financial resources toward lower levels of government to support the grassroots level in achieving the "three guarantees." At present, we are accelerating the implementation of various kinds of policies and anticipating more effects produced by these policies.
First, we have accelerated the implementation of new combined supporting policies through tax and fee cuts to invigorate market entities. We have expedited VAT credit refunds, giving priority to micro- and small-sized companies. The issuing of VAT credit refunds to micro- and small-sized companies has been in place since April. Meanwhile, the refunding of outstanding VAT credits to medium-sized companies, which was scheduled for July, has started ahead of time in May. The taxation department is currently working on this. Refunding outstanding VAT credits to large companies, which was scheduled for October, will start in June to ensure the policies bring benefits to enterprises as soon as possible. We have raised the additional tax deduction coverage for R&D costs for small- and medium-sized sci-tech enterprises. A raft of favorable tax and fee policies have been carried out in an orderly manner, including an exempting VAT payments for small taxpayers. Just now, Mr. Wang Daoshu said thatthe country has reduced taxand feeburdens and increased cash flows for enterprises by more than 1.6 trillion yuanso farthis year. The central government has arranged special transfer payments to support local efforts in reducing taxes and fees and ensuring people's livelihoods. I also mentioned that a total of 1.2 trillion yuan of special transfer payments from the central government has been arranged in addition to general transfer payments, with 800 billion yuan from this year's budget having already been allocated in batches.
Second, we have promoted the issuing and utilization of special-purpose local government bonds to stimulate and expand effective investment. This year, the ceiling amount of special-purpose bonds for local governments is 3.65 trillion yuan. After 1.46 trillion yuan of a special bond quota was front-loaded last December, all remaining bond quota issued for project construction was allocated by March. By May 15, local governments had issued 1.5 trillion yuan in special-purpose bonds, up 1.3 trillion yuan from the same period last year. Authorities are accelerating the issuing of the remaining bond quota for this year. By the end of April, the issued bonds had supported more than 11,000 projects and 120 billion yuan of special bonds had been used to fund major projects, providing strong support for expanding effective investment and maintaining stable macroeconomic performance. What I want to emphasize here is that special-purpose local government bonds are placed under budgetary management for government-managed funds instead of the general public finance. In contrast with general bonds included in the deficit, special bonds are characterized by principal and interest repayments with the yield of the programs they are issued for, so that they can restore balance to financing.
Third, we have increased policy support to help businesses tide over difficulties. In terms of business size, we have focused on boosting assistance to micro- and small-sized enterprises. Support policies, such as tax and fee cuts and inclusive finance, have been weighted more heavily toward such enterprises to help them reduce costs. In terms of industries, we have strengthened efforts to assist sectors heavily hit by COVID-19, such as logistics and catering, providing them more preferential tax policies and alleviating the pressures brought about by social insurance contributions. Local governments have also been encouraged to proactively allocate funds to provide subsidies for enterprises and self-employed workers struggling with rent, utility bills, guarantee fees and COVID-19 prevention costs.
China secured a stable economic performance in the first quarter of this year. At the recent meeting of the Political Bureau of the CPC Central Committee, General Secretary Xi Jinping put forth clear requirements that China should step up macro policy adjustments and make solid efforts to maintain stable economic performance, and work hard to achieve this year's economic and social development goals. To fully implement the decisions and plans of the CPC Central Committee, the MOF will promptly design incremental policy tools, enhance well-timed regulations, maintain an appropriate lead time and redundancy of target-oriented policies, and bolster the role of public finance in adjusting macroeconomic performance. By doing so, we will stabilize the economy, ensure the achievement of the year's economic and social development goals, and keep the economy running within a reasonable range. Thank you.
Shou Xiaoli:
Thank you to the three speakers as well as friends from the media. Today's press conference is hereby concluded. Goodbye.
Translated and edited by Yuan Fang, Zhang Rui, Zhou Jing, Huang Shan, Xu Kailin, Wang Yiming, Wang Wei, Gong Yingchun, Ma Yujia, Yang Xi, Wang Yanfang, Qin Qi, Li Xiao, Li Huiru, He Shan, Wang Qian, Zhu Bochen, David Bal and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
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