China will roll out larger scale tax cuts this year to boost economic growth by lowering the tax burden on companies, said Liu Kun, China's finance minister, in an interview on Thursday.
(File photo: CGTN)
Liu said that the tax cut in the pipeline would be inclusive, simple and practical, and will be implemented at an early date.
His remarks came on the heels of a new batch of tax breaks for small and micro firms, which comprised of lower tax rates, higher tax thresholds and favorable policies for investors in tech startups.
"Some 17.98 million businesses in China are covered by the inclusive tax reduction, accounting for more than 95 percent of the total corporate taxpayers and with 98 percent of them privately owned," Liu said.
In the next step, China will also step up efforts to push forward value-added tax reform for substantive tax cuts, implement special individual income tax deductions, and ease business burden from social insurance payments, he said.
With intensive tax breaks, China is estimated to save a total of 1.3 trillion yuan (nearly 200 billion U.S. dollars) for market entities in 2018, outshining similar moves by any other countries in terms of scale and ratio to GDP.
While persisting in tax cuts, China will take bolder and more effective measures to implement proactive fiscal policy, Liu said.
"The fiscal expenditure will be improved moderately according to the economic situation and demand, and there will be a relatively substantial increase in the issuance of special-purpose local government bonds to support projects under construction and fix shortcomings."
China will make fiscal funds more effective and channel more capital into weak areas including poverty relief, agriculture, innovation, and environmental protection, Liu said, adding that the general government spending would be cut by more than five percent.
Liu denied concerns about massive stimulus and stressed that the measures were countercyclical, aimed to strike a balance between stable growth and risk prevention, and would be more market-oriented and law-based.
China has assigned 1.39 trillion yuan worth of bonds to local governments, which Liu said would be used to finance the development of poor areas and major projects of railways, water conservation, and rural revitalization.