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August 25, 2016

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China to start fiscal reforms

CHINA will kickstart fiscal reforms in areas of national defense and basic public services this year, with plans to focus on education, healthcare and environmental protection in 2017-2018, the State Council said yesterday.

Reforms will “moderately increase” spending responsibilities of the central government in order to ensure public security and equality, and local governments will be given authority to manage some public services in order to better meet local needs, the State Council said in a notice published on its website.

China will clarify responsibility for spending between national and local governments, and will also reduce overlapping responsibilities, the notice said.

“Overlapping central and local government fiscal responsibilities must be reduced and standardized,” the notice said.

China has been looking to centralize more fiscal powers in order to streamline spending and revenue collection, especially as local governments face mounting debt woes and falling tax revenues.

The country has rolled out a new value added tax system that is collected centrally, replacing a business tax system that was collected by local governments.


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