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E-mail China.org.cn, August 23, 2024
CCTV:
We've noticed that issues such as advancing consumption tax reform and developing local tax systems have been widely discussed recently. Therefore, what specific plans does the MOF have for improving these tax systems? Thank you.
Wang Dongwei:
Thank you for your question. I've noticed the extensive media coverage of these issues, as well as the valuable insights and suggestions offered by experts and scholars.
Since the introduction of the tax revenue-sharing system in 1994, and especially following the third plenary session of the 18th CPC Central Committee, our fiscal and tax systems have continued to improve. The current local tax systems have gradually developed, playing a crucial role in ensuring financial strength of local governments and supporting sustained, healthy economic and social development. However, as China's economy is transitioning to a stage of high-quality development, we recognize that our local tax systems still require improvement. We need to optimize the structure and allocation of tax rights and address other prominent issues.
The third plenary session of the 20th CPC Central Committee has provided comprehensive arrangements and clear requirements for deepening fiscal and tax system reforms. I'll address your question in three aspects:
First, we will expand the sources of tax revenue at the local level. Currently, the central government collects excise tax, a major revenue generator, primarily at the production and import stages. We plan to move excise tax collection further down the production-to-consumption chain, with the power of collection steadily being passed to local governments. This transition will consider the division of revenue between central and local governments and tax administration capabilities. Implementation will be item-specific and phased, aiming to expand local revenue sources and encourage improvements in local consumption environments. We will look into rolling the urban maintenance and construction tax, education surcharges, and local education surcharges into one single local surtax. Local governments will have the authority to set the rate for this tax within a predetermined range. We also plan to reform the environmental protection tax to include volatile organic compounds in its scope.
Second, we will moderately expand local tax rights. In recent years, in legislations on local taxes, such as the Environmental Protection Tax law, Resource Tax Law, and the Tax Law on Farmland Used for Non-agricultural Purposes, provincial-level government has the authority to set the rate for these taxes within a predetermined range and implement tax deductions and exemptions, among other administrative rights. Moving forward, while maintaining the central government's unified legislation and the right to begin collecting certain types of taxes, we will explore ways to give more power to local authorities in determining elements of local tax systems and their implementation.
Third, we will regulate the management of non-tax revenue. Non-tax revenue primarily belongs to local authorities and is a crucial component of local financial resources. We plan to regulate the management of non-tax revenue, appropriately delegate some management authority to local governments and allow them to tailor their practices to local conditions. We will further reform the system of paid use for natural resources. All revenues generated on the basis of the exercise of administrative power, government credit, and state-owned resources and assets will be placed under government budget management. For toll highways, we will adhere to the "beneficiary pays" principle to optimize related policies.
Next, we will fully implement the tasks outlined in the third plenary session's resolution, thoroughly explore and assess specific reform plans as well as launch them once they are mature.
Thank you.
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