(Bloomberg) -- Finance Minister Xiao Jie said China will keep cutting taxes, including increasing breaks for small- and medium-sized businesses and easing burdens on individuals.
Authorities will also continue value-added tax reforms, Xiao said at a briefing Wednesday on the sidelines of the annual legislative sessions in Beijing. Vice Finance Minister Shi Yaobin said officials drafting a property tax are considering using common approaches adopted in other countries. He didn't say when such a levy might take effect.
Xiao expanded on earlier announcements, saying China plans an additional 300 billion yuan ($47 billion) of reductions in administrative fees and operating charges, to bring taxes and fees down by 1.1 trillion yuan. Policy makers on Monday pledged 800 billion yuan of tax cuts for companies and individuals in 2017 to support growth and remain a competitive draw for investors. They also flagged the property tax legislation push, and said thresholds for levying personal income taxes will be lifted.
The process of revising the personal income tax law will be accelerated, the officials said. “Everyone here will benefit,” Xiao added Wednesday, drawing laughter from those in the room.
Deficit Goal
China's proactive fiscal policy remains unchanged, Xiao said, after the ministry announced Monday that it cut the budget deficit goal for the first time since 2012, to 2.6 percent of gross domestic product from 3 percent. The government is boosting spending on special-purpose bonds and budgeted infrastructure investment, Xiao told reporters in Beijing.
Read More: China Seen Facing ‘Impossible Challenge' on Budget, Tax and GDP
Xiao said Wednesday the government debt-to-GDP ratio fell to 36.2 percent last year from 36.7 percent the prior year, and it won't change significantly in the future. Outstanding government debt was 29.95 trillion yuan last year, he said.
China's economy expanded by 6.9 percent in 2017, the first full-year acceleration since 2010. Meanwhile, borrowing continues to rise, with total debt climbing to 266 percent of economic output last year from 258 percent in 2016, Bloomberg Economics estimates.
With expansion on a solid footing and debt surging, officials have signaled they want to move away from pursuing rapid growth at any cost. The government has scrapped numerical growth targets on the broad M2 money supply, signaling a departure from the credit-led expansion of the past.
Xiao said the ministry will boost fiscal support on smaller enterprises this year and aim to help them by steering more government procurement their way.
--With assistance from Emma O'Brien
To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net.
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Jeff Kearns, Emma O'Brien
©2018 Bloomberg L.P.
With assistance from Yinan Zhao
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