"The proactive fiscal policy will be more effective. The deficit-to-GDP ratio will be set at 3%. We will improve preferential policies for taxes and fees, and extend and optimize existing measures such as tax cuts and tax rebates." On March 5, the first session of the 14th National People's Congress (NPC) opened at the Great Hall of the People. With the government work report, fiscal and tax policies for 2023 were further clarified.

Proactive fiscal policy is the "stabilizer" of economic development. A number of experts and scholars in an interview with the People's Daily Online reporter said that this year's deficit to GDP ratio and special debt compared to last year has increased, proactive fiscal policy to increase spending, boost market confidence. At the same time, the improvement of preferential tax policies and other arrangements reflects the sustainability of macro policies. Policy dividends will further empower business entities and help stabilize the macro economy.

The deficit-to-GDP ratio of special debt double increase fiscal policy to increase the effect

The Central Economic Work Conference to be held at the end of 2022 called for the proactive fiscal policy to be more effective. We will maintain the necessary intensity of government spending, optimize the mix of deficit, special bonds, discount interest and other instruments, and ensure that fiscal sustainability and local government debt risks are under control while effectively supporting high-quality development. We need to increase transfer payments from the central government to local governments, increase their financial resources, and ensure that the three guarantees are implemented at the community level.

This year's government work report once again makes it clear that the proactive fiscal policy will be more effective. The deficit ratio will be set at 3%. Meanwhile, 3.8 trillion yuan will be allocated to local government special bonds (hereinafter referred to as special bonds).

Combined with the budget report for 2023 released on March 6, the deficit ratio is 0.2 percentage points higher than last year's 2.8 percent target. The deficit is 3.88 trillion yuan, 510 billion yuan more than the previous year. At the same time, the limit on special bonds will be increased by 3.8 trillion yuan, 150 billion yuan more than last year.

A number of industry experts in an interview with the People's Daily Online reporter said that raising the fiscal deficit ratio from 2.8% to 3% will help stabilize and boost market confidence; We will increase the amount of new special bonds to 3.8 trillion yuan to effectively hedge downward economic pressure and promote overall economic improvement.

"A deficit ratio of 3 percent is a more reasonable arrangement after taking into account all aspects." Shi Zhengwen, a professor at the China University of Political Science and Law, told the People's Daily Online that raising this year's deficit-to-GDP ratio to 3 percent will send a positive signal that the government is stepping up efforts to promote a steady economic recovery and increase market confidence. At the same time, since revenues are expected to be better this year than last, there is no need to raise the deficit excessively. A 3 per cent deficit-GDP ratio reflects the government's focus on fiscal sustainability rather than strong stimulus.

Li Xuhong, director of the Institute of Fiscal and Tax Policy and Application at the National Accounting Institute in Beijing, said in an interview with People's Daily Online that the deficit-to-GDP ratio will be raised by 0.2 percent from last year's 2.8 percent, taking into account the overall goal of balancing fiscal revenue and expenditure and achieving economic stability while making progress, and the policy arrangement will be closely linked with economic development. Special bonds have played a positive role in speeding up the implementation of major projects during the 14th Five-Year Plan Period and in encouraging and attracting more private capital to participate in major national projects and projects to strengthen weak links. They have stimulated and leveraged private investment. Therefore, increasing the amount of new special bonds to 3.8 trillion yuan will ensure that government investment is not reduced and further stimulate the enthusiasm of private investment.

Preferential tax and fee policies continue to exert their power to accurately empower the development of business entities

In this year's government work report, we will improve preferential policies for taxes and fees, and extend and optimize existing measures such as tax cuts and tax rebates.

Li Jie, a deputy to the National People's Congress and Party secretary and director of the Sichuan Provincial Tax Bureau of the State Administration of Taxation, said in an interview with People's Daily Online that "continuation" is to enhance the continuity of policies, coordinate the rescue of enterprises and optimize the tax structure of the need to further extend the policy of tax reduction, fee reduction, tax refund and tax delay; "Optimization" is to enhance the precision of policies, focus on key industries and key areas, and make tax and benefit policies achieve precise "drip irrigation", adding impetus to high-quality economic development.

"Sustained policy efforts will continue to focus on 'making better use of the fundamental, pillar and guarantee role of taxation in national governance.'" 'Generally speaking, the continuation and optimization of policies will still play an important role in helping companies bail out, boosting the confidence of business entities and stabilizing the economic market,' Li said.

"At present, the macro economy has been stable and upward, but in terms of the actual situation, there are still a lot of business entities have not yet got out of the business predicament, and still need continuous support from the policy." Yang Yanying, a professor at the School of Government at the Central University of Finance and Economics, told People's Daily Online that on the basis of continuously improving preferential tax policies, tax cuts and tax rebates should continue to be implemented according to the actual situation of business entities.

In 2022, China cut taxes and fees by more than 4.2 trillion yuan, a record high. The tax burden per 100 yuan of business revenue for 100,000 enterprises with key tax sources was cut by 2.7 percent. Our tax revenue as a share of GDP fell to 13.8 per cent.

"In the past two years, the number and strength of preferential tax policies introduced by the state have exceeded the expectations of enterprises, bringing great confidence and support to their operation, innovation and development." Wei Lihua, chairman and president of the National People's Congress, Junlebao Dairy Group, told reporters of the People's Daily Online that this year's government work report also pointed out that to improve preferential policies for taxes and fees, tax rebates and tax relief, such as the continuation of the continuation of the optimization of the optimization, which is a strong "backing" for the development of private enterprises.

"As the first generation of high-speed rail workers, I believe the company will enter a new stage of rapid development with a more perfect tax preferential policy." Zhang Xuesong, a deputy to the National People's Congress and chief skills expert of CRRC Corp, said the country has introduced a series of policies in the past five years to support enterprises and benefit them, providing a source of power for rapid, healthy and sustainable development of enterprises.

Ma Li, a deputy to the National People's Congress, deputy director of the Tax Service Center of the Yinchuan Tax Bureau and Party secretary of the First Tax Branch of the Jinfeng District Tax Bureau of Yinchuan, said that in the past five years, The large-scale tax and fee cuts and tax rebate and fee relief work highlight the benefits and benefits tax work has brought to business entities in ensuring people's livelihood, stabilizing growth and employment, supporting the development of key industries, helping small, medium and micro enterprises overcome difficulties, and helping rural revitalization.

We will strengthen policy coordination and coordination to form synergy for jointly promoting high-quality development

This year's government work report made it clear that China's GDP is expected to grow by around 5% in 2023.

To achieve the growth target, we need the coordinated efforts of macro policies. This year's government work report points out that we need to prioritize stability, seek progress while maintaining stability, maintain continuity and pertinency of policies, strengthen coordination and coordination of various policies, and form synergy for high-quality development.

"As China enters a new stage of high-level national governance, reform is the key to overcoming difficulties and solving problems, and the synergy of policies will help reform more effectively. "Therefore, fiscal and tax policies will work together with monetary, industrial and social policies to promote macroeconomic goals." Li Xuhong said.

Li Xuhong further elaborated, fiscal policy and other macro policy coordination should focus on the main line of economic development. The focus of fiscal policy is to increase its effectiveness. We should appropriately increase the expansion of fiscal policy, improve its effectiveness, and better leverage the role of fiscal policy in leveraging social funds. The key to monetary policy is precision. On the premise that the growth of broad money supply and social financing basically matches the growth of the nominal economy, we will play the role of macroeconomic stabilizer, and use the robustness of monetary policy in conjunction with fiscal policy to avoid stagflation and other potential risks.

"The key to industrial policy is directional guidance. Through clear industrial planning and layout, we should gather financial funds and social capital, form an innovative combination of industry and finance, and focus on the development of national pillar industries and key core technologies." 'The focus of social policy should be to make up for market failures, play a role in guaranteeing and stabilizing economic development, and help achieve social policy goals by increasing fiscal spending in key areas such as rural revitalization, education and basic livelihood,' Mr. Li said.

Yang said that in the past year, the country has introduced a package of policies and follow-up measures to promote progress while maintaining stability in the macro economy. Among them, fiscal and tax policies, as the most direct policy tools, have implemented new combined tax and fee support policies, which provide "real money" substantive support for the continuous rescue of business entities, boost enterprises' investment in research and development, reduce costs and increase efficiency, and effectively enhance the confidence of business entities.

"Going forward, fiscal and tax policies should coordinate with targeted monetary and industrial policies to give full play to the comprehensive effect of a package of policies. While continuing to help business entities rescue development, we should further focus on scientific and technological innovation, key industrial chain and other key areas to provide policy support and guarantee for high-quality economic development and deepening supply-side structural reform." Yang Yanying said.

Source: Ministry of Finance of the People's Republic of China