Chinese Premier Li Urges Bigger Tax Cuts to Ensure Economic Growth

(Bloomberg) -- China needs larger cuts in taxes and fees in order to ensure steady economic growth in the first quarter amid fresh downward pressures, said Premier Li Keqiang, urging more support for the most fragile parts of the economy.

On top of extending tax cuts that have expired, China must deepen the cuts, with more deductions for research and development spending, and special support for the service sector and other areas that have been heavily impacted by the pandemic, China National Radio cited Li as saying at a special meeting on the issue. 

The call for greater cuts comes as as the government seeks to encourage household spending as part of efforts to stimulate economic growth. Personal income tax breaks worth around 110 billion yuan ($17.3 billion) have been extended, according to a State Council statement last week. 

No details on the proposed new tax cuts were given. Local governments were also urged to come up with measures to crack down on tax evasion and curb excessive fees. 

The world's second-biggest economy is facing rising pressure on multiple fronts, with policy makers focusing efforts on stabilizing growth with “proactive” policies. The housing market is struggling, local government finances are being hit by weak land sales and there has been a series of recent Covid-19 outbreaks, including one which caused authorities to lock down the city of Xi'an. 

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With assistance from Bloomberg