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China gov't struggling to meet fiscal target

BEIJING, June 24 (Xinhua) -- China may struggle to make this year's fiscal revenue target, the finance minister warned on Tuesday.

The central treasury received 2.9 trillion yuan (472 billion U.S.dollars) from January to May, a year-on-year growth of 6.3 percent and 0.7 percentage points lower than the budgeted target, said Lou Jiwei, when briefing lawmakers on the final accounts for 2013.

This year's budgeted growth in central fiscal revenue is 7 percent.

The government is "under heavy pressure," Lou said.

Difficulties lie in the downward pressure on the economy and the program to replace business tax with value-added tax (VAT) in some service sectors, which will reduce tax revenue to some degree, he explained.

Despite the poor central performance, total national fiscal revenue has reached 6.12 trillion yuan, up 8.8 percent and higher than the 8 percent budgeted for.

"Economic growth is stable and performance remains in a reasonable range," according to Lou. "The general situation has met expectations."

The State Council report was submitted to the Standing Committee of the National People's Congress (NPC) at its ongoing bi-monthly session, presided over by Zhang Dejiang, chairman of the NPC Standing Committee.

SLOWER FISCAL REVENUE GROWTH IN 2013

According to the report, the central treasury had an annual revenue of 6.02 trillion yuan in 2013, up 7.2 percent from 2012.

Although the actual revenue in 2013 was higher than the budgeted one, the annual growth was lower than 9.4 percent in 2012 and 20.8 percent in 2011.

The revenue from several major taxes, including VAT and consumer tax on domestic and imported products as well as the customs, were all lower than budgeted figures. But the revenue from corporate and individual income taxes exceeded the set targets, thanks to corporations' unexpected profit growth.

Meanwhile, the central government's spending continued to rise. In 2013, the figure stood at 6.85 trillion yuan, 6.8 percent higher than in 2012.

The deficit of central government was about 850 billion yuan as the budgeted goal and deficit of the whole country stood at 1.2 trillion yuan, accounting for 2.1 percent of gross domestic product, according to the report.

Although central fiscal revenue saw slower growth, the central government continued to expand spending on sectors directly linked to people's livelihoods, such as health services and social insurance.

Expenses on health services, social insurance and cultural services increased by 26.4 percent, 14.2 percent and 4.3 percent respectively.

In an audit report on the central government's final accounts for 2013 also tabled for review, the National Audit Office (NAO) acknowledged the effective implementation of the central budget.

In addition, the central government smoothly pushed forward the fiscal and taxation reform, canceling or decentralizing 416 items of administrative approvals, removing 348 administrative fees and expanding the tax reform, said Liu Jiayi, auditor-general of the NAO, when elaborating on the report to lawmakers.

The central government also adopted effective measures to control and prevent financial risks, manage liquidity and supervise credit growth, Liu said.

FINANCIAL REFORM TO CLOSE LOOPHOLES

However, the NAO also pointed out a number of loopholes concerning budget implementation and management of the central treasury.

Auditors discovered vague categorizing and confusing definition in the central budget and inefficient arrangement of the revenue, Liu said.

Also, malpractice was found in the allocation of government money. Auditors uncovered 1.86 billion yuan of central funds that were falsely claimed by local governments or embezzled by officials.

According to the report, a large amount of government funds was not put into effective use. By the end of 2013, 32 central government departments audited by the NAO reported about 49.38 billion yuan that remained in their bank accounts for more than a year and 836 million yuan of that was there for more than five years.

The NAO suggested in the report that the central government strictly implement financial protocols and speed up fiscal reform so as to streamline the allocation of government funds between central and local governments and prevent malpractice.

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