Chinese Premier Wen Jiabao Friday urged all localities across the country to work to facilitate reform on the export tax rebate system which may have an impact on the benefits of local governments.

Wen said at a meeting on the reform that with the rapid growth of China's exports, the problem that the share of tax fails to be refunded to enterprises has become increasingly prominent. This has affected the normal operation of export-oriented enterprises, especially those engaged in export business.

The premier attributed the failure to the unreasonable export tax rebate mechanism, saying it failed to meet the needs for industrial restructuring and the volume of the rebates has grown far beyond the capacity of the central finance. As a result, "the more rapid exports grow, the heavier the financial burden the central finance faces," Wen said.

To reform the current export tax rebate system, he said, efforts should be intensified to deepen the reform of the financial and foreign trade systems, which will help improve enterprises' competitive edge, export product mix and the efficiency of export business, alleviate the government's financial burden, promote exports and enhance management of tax refunding.

China has accumulated sufficient foreign exchange reserves thanks to years of fast growth in economic development and exports as well, which creates a good condition for the reform, Wen said, stressing, "we must lose no time to promote the reform."

According to Wen, plans have been drawn out for the reform after mass investigations. The major reform measures cover readjustment of the export tax rebate rates, with the increased share of rebated tax paid by both the central and local fiscal departments.

As an import part of the reform, the value-added tax on imports and income of consumption tax will be first used for tax rebate, and the arrears of what should be refunded to export enterprises will be paid by the central finance, Wen said.

(Xinhua News Agency October 11, 2003)