Thursday at the ongoing National People’s Congress (NPC) session in Beijing, senior officials spoke about the role of taxation and fiscal policies in building a harmonious society.

At a joint afternoon press conference, Finance Minister Jin Renqing and head of the State Administration of Taxation (SAT) Xie Xuren said measures would be adopted to narrow the gap between east and west, urban and rural, rich and poor, and to promote concerted development of the economy, society and environment.

“Taxation not only brings huge revenues for government, it also helps adjust economic structures and income distribution,” Xie said.

Tax revenue (excluding customs and agricultural tax) last year raised 2.6 trillion yuan (about US$311 billion), up 25.7 percent on 2003. This rapid growth provided government with more resources to help underdeveloped areas and implement public management.

To balance the development of different regions, central government also granted preferential tax policies to projects in its Western China Development and Northeast China Revitalization strategies over recent years.

Reform of agricultural taxation has not only increased farmers’ incomes, but will also promote rural economic development.

In addition, to better utilize resources and protect the environment, resource taxation will be improved and a system of fuel tax formulated.

In response to expanding income gaps, measures are planned to lessen inequality and promote social fairness. The current taxation threshold, set about 20 years ago, is widely believed to be too low.

Xie said that the Ministry of Finance and the SAT have already studied reform of personal income tax, and prepared a preliminary scheme. But it still needs to go to the State Council and NPC Standing Committee.

The SAT is proposing favorable policies to facilitate the reemployment of laid-off workers. To assist the running of the social security system, collection of social security fees will also be strengthened.

Similarly, the finance ministry is devoted to helping grassroots governments out of financial difficulties. To this end, it will appropriate a special fund of 15 billion yuan (about US$1.81 billion) this year.

According to Jin Renqing, all the money will go to: counties in financial difficulty; counties or townships that do well in cutting down redundant personnel; and grain bases.

Those that perform well financially will also be subsidized by central budgets according to their achievements.

The Finance Minister emphasized that county- and township-level governments were the basic units of operations for the country’s administrative system.

He also urged the exploration of incentives and deterrents for both central and local governments to remedy the financial problems of county- and township-level governments in the next three years.

“It has great significance in strengthening grassroots governments, improving our ability to govern, promoting economic and social development, and building a harmonious society,” Jin pointed out. He also promised more funds in order to solve problems.

(China.org.cn by staff reporter Tang Fuchun, March 11, 2005)