In his speech at the National Financial Work Conference held on the 20th, Minister of Finance Xie Xuren emphasized that a proactive fiscal policy will be adopted in the coming year. He stressed the importance of reforming the tax system and improving structural tax reduction measures to better support people's livelihoods and drive sustainable economic growth. The goal is not only to stabilize the economy but also to foster social harmony and long-term stability.
In 2012, the Ministry of Finance intensified its efforts in structural tax cuts, advancing the transition from business tax to value-added tax (VAT) and expanding the pilot program to nine provinces and three cities. By now, the impact of this reform has been significant. For example, Shanghai saw a revenue reduction of 22.5 billion yuan between January and October. In his address, Xie Xuren highlighted that in 2013, the VAT reform would be extended to more industries, including transportation, modern services, telecommunications, railways, construction, and installation sectors. This expansion aims to boost the development of modern service industries, upgrade industrial structures, and support small and micro enterprises. Additionally, the resource tax reform will continue, with an expanded ad valorem tax scope to promote more efficient resource use.
Liu Wei, vice minister of the State Council and a professor at the Central University of Finance and Economics, noted that over a decade ago, coal prices were below 100 yuan per ton, with a tax of 5 yuan per ton, equivalent to a 5% tax rate. Recently, however, coal prices have surged to hundreds of yuan per ton, yet the tax remains unchanged. This situation encourages over-exploitation and environmental degradation. Therefore, implementing an ad valorem resource tax on coal is urgent. It will not only increase local government revenue but also push major coal users like petrochemical and power companies to transform and upgrade, while creating space for new energy development.
Xie Xuren also mentioned that in 2013, the government will enhance stable export policies, lower import tariffs on energy, resources, and raw materials, and implement reduced temporary tariffs on advanced technology equipment and key components. Additional tax and fee reductions will be introduced to ease the burden on businesses and society, promoting economic restructuring.
He pointed out that the financial gap between revenue and expenditure in 2013 will be significant. On the revenue side, global economic uncertainties, domestic economic challenges, declining corporate profits, and tax reforms will all affect income growth. On the expenditure side, there are growing needs to support people's livelihoods, develop social programs, and invest in education, healthcare, social security, agriculture, and infrastructure. These pressures mean that fiscal spending will remain high.
Looking ahead, Xie Xuren said the government will optimize the structure of fiscal spending to better protect and improve people's livelihoods. Priority will be given to education, healthcare, social security, employment, affordable housing, and public culture. According to him, since the beginning of this year, the proportion of state financial spending on education relative to GDP has reached 4%.
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