(Mid-Year Economic Observation) Active fiscal policy supports China's economy to stabilize and strengthen

  China News Agency, Beijing, July 18 (Reporter Zhao Jianhua) In the first half of the year, China's economy grew by 12.7% year-on-year, and the two-year average growth rate was 5.3%.

Fiscal and taxation experts believe that proactive fiscal policies are supporting the stabilization and strengthening of the economy.

The proactive fiscal policy that has been implemented for many years has formed a benign interaction with economic growth.

  Benefiting from economic growth, China's fiscal revenue has shown restorative growth.

From January to May, the national fiscal revenue increased by 24.2% year-on-year and 7.3% year-on-year.

Among them, the national tax revenue increased by 25.5% year-on-year, and increased by 6.8% year-on-year.

  Li Xuhong, director of the Institute of Fiscal and Tax Policy and Application of Beijing National Accounting Institute, analyzed that fiscal revenue has maintained a strong growth trend, which provides a guarantee for fiscal expenditure.

From January to May, national fiscal expenditure increased by 3.6% year-on-year.

It is worth noting that the 3.6% increase was entirely driven by the growth of local fiscal expenditures.

Central government expenditures fell by 8.9% year-on-year, and the saved funds provided large-scale transfer payments to local governments, providing financial support for local governments to reduce taxes and fees, protect and improve people's livelihood, and supplement shortcomings, and help market players restore vitality and enhance vitality.

  National fiscal expenditures have maintained an expansion trend, and the total scale of expenditures has continued to grow on the basis of last year.

This year, the national general public budget expenditures will exceed 25 trillion yuan (RMB, the same below), and the transfer payments to local governments will be 833.7 billion yuan.

Transfer payments to local governments account for about one-third of the national general public budget expenditures.

According to Bai Jingming, a researcher and former vice president of the Chinese Academy of Fiscal Sciences, more than 50% of general public budget expenditures in some central and western regions come from transfer payments from the central government.

The transfer payment scale of the central government to certain places has reached hundreds of billions, and these transfer payments can stimulate local consumption and investment.

  While increasing fiscal expenditures, China continues to implement the institutional tax reduction policies introduced in recent years, such as lowering the value-added tax rate, value-added tax credit and special additional deductions for personal income tax, etc., so as to continue to release the policy stacking effect.

  At the same time, increase support for manufacturing and technological innovation.

Continue to implement the 75% deduction policy for enterprise R&D expenses, increase the percentage of manufacturing enterprises’ extra deduction to 100%, and encourage enterprises to increase R&D investment.

For advanced manufacturing enterprises, the incremental value-added tax will be refunded in full on a monthly basis.

  The policy effect has already appeared.

For example, Bai Jingming said that in the first half of the year, the national high-tech manufacturing industry's added value increased by 22.6% year-on-year, and the two-year average growth rate was 13.2%.

Investment in high-tech industries increased by 23.5% year-on-year, with an average growth rate of 14.6% over the two years.

Especially the rapid growth of new energy vehicles.

Expectations become better, stimulating investment, and expectation and investment form a virtuous circle.

  While supporting technological innovation, tax cuts and fee reductions continue to favor small and micro enterprises and individual industrial and commercial households.

Increase the value-added tax threshold for small-scale taxpayers from monthly sales of 100,000 yuan to 150,000 yuan.

On the part of small and micro enterprises and individual industrial and commercial households whose annual taxable income is less than 1 million yuan, on the basis of the current preferential policies, the income tax will be halved.

  The government cuts taxes and fees, and the money saved is of great importance to small, medium and micro enterprises.

Li Xuhong said that tax reduction and exemption have effectively alleviated the pressure on cash flow and played an important role in their survival, development and social employment protection.

  The economy has recovered steadily and market vitality has improved.

According to data released by the State Administration of Taxation, from January to May, new tax-related market entities (enterprise and individual industrial and commercial households and other market entities that go to the taxation department for new tax identification, invoice receipt, tax declaration and other tax-related matters) total 522.25 Million households, an increase of 40.19% over the same period in 2020, an increase of 24.75% over the same period in 2019, and an average increase of 11.69% over the two years.

  Li Xuhong believes that increased confidence, better expectations, and increased activity of market players will promote sustained and stable economic recovery; economic recovery will form a good tax source and drive tax and fiscal revenue growth.

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