China is ready to roll out greater, more targeted tax and fee cuts this year following robust fiscal revenue growth in 2021 and amid efforts to better protect and energize market players and bolster key industries, an official said on Tuesday.
Xu Hongcai, vice-minister of finance, said at a news briefing on Tuesday that the country's fiscal revenue rose 10.7 percent year-on-year to 20.25 trillion yuan ($3.19 trillion) in 2021.
The growth was mainly bolstered by last year's economic recovery, and a steady GDP growth also formed a good foundation for the fiscal revenue rise, Xu said.
He added that last year, China's newly added tax and fee cuts amounted to over 1 trillion yuan. This year, efforts in tax and fee cuts will be continued and intensified to better protect market players amid uncertainties.
"As the economy is facing threefold pressure from demand contraction, supply shocks and weakening expectations, the external environment is growing more complicated with rising uncertainty. Yet the 100 million market players are there to boost our confidence in, and resilience of China's economic development. These businesses are the critical foundation for keeping growth stable," Xu said.
"Therefore, fiscal policies will improve efficiency to support them. In 2022, more intensified tax and fee cuts will be rolled out, accommodating the needs of market players."
New tax and fee cuts will focus on high-quality development and manufacturing to advance technological innovation and upgrading. Such cuts will also cater to small and micro businesses, as well as individually run businesses, in an effort to energize their growth. The previously confirmed tax and fee reductions that have matured at the end of 2021, will be extended this year in hopes of easing pressure on smaller firms.
This year's tax and fee cuts will also shed light on increasing the fiscal capacity of provincial and local governments, Xu said. Central finance will scale up the intensity of transfer payments to local-level governments to ensure that the implementation of tax and fee cuts won't be affected due to limited local fiscal revenue.
The country's fiscal spending edged up 0.3 percent year-on-year to 24.63 trillion yuan last year, the vice-minister said. Specifically, the special transfer payment mechanism－which ensures fiscal funds go straight to prefecture- and county-level governments and directly benefit businesses and the public－has benefited some 1.66 million market entities in 2021. The mechanism first emerged in 2020 to deal with the impact brought by COVID-19, and then grew into normal fiscal practice last year.
In December, the finance ministry released 1.46 trillion yuan in advance as part of the 2022 quota for local special bonds. Xu said at the Tuesday briefing that China will set the annual quota on local government bonds reasonably this year to boost infrastructure investment, particularly in key projects currently under construction.