The Ministry of Finance released a semi-annual report on fiscal revenue and expenditure. The report showed that in the first half of this year, the revenue in the general public budget reached 11.9203 trillion yuan, up 13.3% year-on-year. The relatively high growth rate of fiscal revenue was not only driven by the recovery of economic growth, but also affected by the low base figure of the same period last year. Meanwhile, expenditure maintained the necessary intensity, and spending in key areas was strongly guaranteed.

a higher increase in fiscal revenue

In the first half of this year, the national tax revenue reached 9966.1 billion yuan, up 16.5% year-on-year. Among them, domestic VAT increased 96%. "The higher growth rate of fiscal revenue is not only driven by the recovery of economic growth, but also mainly due to the implementation of a large-scale VAT rebates and refunds policy since April last year, which reduced the base." Xue Yugan, deputy director of the treasury payment center of the Ministry of Finance, said that as a result, tax revenue, especially domestic VAT, increased significantly, which in turn increased the growth rate of fiscal revenue. This year, the return of relevant tax returns returned to normal, with the first half of the year less than 15236.6 billion yuan.

The overall structure of fiscal revenue and expenditure in the first half of the year was further optimized, and fiscal sustainability was fully reflected, providing financial guarantee for the steady and sound performance of the national economy and the steady improvement of the quality of development, said Li Xuhong, director of the academic committee of the National Accounting Institute in Beijing.

"From the perspective of the income trend in the later period, the overall recovery of China's economic operation will provide important support for the growth of fiscal revenue. But with the gradual return to normal of the tax rebate in the second half of last year, the incomparable factor of the less rebate of the tax rebate in the second half of this year will gradually fade, and the growth of monthly fiscal revenue will decline to some extent, which will be consistent with the growth of economic tax sources," Xue said.

Bai Yanfeng, professor of the School of Finance and Taxation at Central University of Finance and Economics, also believes that with the gradual reduction of the impact of low base factors such as VAT rebates and refunds in the previous year, the growth rate of China's fiscal revenue in the second half of the year will return to a normalization that is compatible with the national economic growth. "This requires us to further implement the policies and measures established at the beginning of the year, further stimulate the inner vitality of economic growth, and maintain the long-term sustainable development of the fiscal economy."

Powerful guarantee for key expenditures

In the first half of this year, the general public budget spending reached 13,389.3 billion yuan, up 3.9% year-on-year. "Financial departments at all levels strengthened the coordination of financial resources, maintained the intensity of necessary spending, and continued to increase investment in weak links and key areas of economic and social development, so that key expenditures on basic livelihood, rural revitalization, major regional strategies, education, and tackling key scientific and technological problems were guaranteed," Xue said.

In terms of areas, social security and employment spending increased by 7.9 percent in the first half; education spending increased by 5 percent; health spending increased by 6.9 percent; agricultural, forestry and water spending increased by 3.7 percent; science and technology spending increased by 2.5 percent; and housing security spending increased by 8.5 percent. "We invested a lot of money in people's livelihood, such as making sure the young are educated, the young are taught, the working are paid, the sick are treated, the old are supported, the elderly are housed, and the weak are helped. The government has worked hard to ensure and improve people's livelihood, and while improving people's well-being, it has expanded effective domestic demand to further drive steady and healthy economic development," Li Xuhong said.

County and district finance operation, especially "three guarantees" (guarantee basic livelihood, guarantee wages, guarantee operation) received high attention. "The central finance attaches great importance to local finance operation, especially grassroots finance operation, and takes multiple measures to support stable fiscal operation, and build a solid bottom line of "three guarantees." Li Dawei, deputy director of the budget department of the Ministry of Finance, said.

In 2023, the central government will allocate 10.06 trillion yuan in transfer payments to local governments, an increase of 7.9% after excluding special transfer payments to support local governments in implementing tax and fee cuts and key livelihood programs. This includes 2.364.9 billion yuan in balanced transfer payments, an increase of 10.3%, and 410.7 billion yuan in awards and subsidies for the mechanism to ensure basic financial resources at the county level, an increase of 8.7%. We will continue to increase financial support to local governments.

Li Xuhong believes that in the future, positive measures should be further taken to increase the financial resources downward, pay close attention to the allocation and use of funds, to ensure the smooth operation of grassroots finance, and ensure the bottom line of "three guarantees". "Next, the central finance will continue to put the work of "three guarantees" in a prominent position, consolidate the guarantee responsibility of local financial departments at all levels, guide local financial resources down to grassroots, and work together to do a good job in the work of grassroots "three guarantees". Li Dawei said.

Policy measures are a leading force

Since the beginning of this year, we have stepped up the effectiveness of our proactive fiscal policy, using policy tools such as special bonds and preferential taxes and fees. "In the first half of this year, local governments issued 2.17 trillion yuan of special bonds for project construction, supporting local governments in carrying out a large number of projects that benefit people's lives and strengthen areas of weakness," Li said.

We also prepared a reserve of special bond projects to support major projects. In the first half of this year, we supported nearly 20,000 special bond projects, giving priority to major strategies and projects. Of this amount, 727.5 billion yuan was used for municipal construction and infrastructure in industrial parks, 421.1 billion yuan for transport infrastructure, 358.8 billion yuan for social programs, and 326.7 billion yuan for government-subsidized housing projects. These efforts played an important role in expanding effective investment and maintaining steady economic performance.

"Next, we will continue to brief local governments on the progress of their spending on special bonds, guide them to speed up the pace of issuing and using special bonds, and actively play a positive role in driving effective investment, so as to stabilize investment to drive employment and growth, and better play the role of special bonds," Li Dawei said.

In terms of helping enterprises, we will improve preferential tax and fee policies, make them more targeted and targeted, and improve their effectiveness in key areas such as incentivizing enterprises to increase investment in research and development, supporting the development of small and micro businesses and individual businesses, ensuring employment and people's livelihood, and supporting the development of new energy vehicles.

Wei Yan, deputy director of the Department of Taxation and Administration of the Ministry of Finance, said that the next step is to strengthen policy reserves, actively plan targeted, practical and effective preferential tax policies, focus on solving difficulties for business entities, constantly enhance the driving force of development, optimize the economic structure, and promote the economy to continue to recover and improve.

How will the proactive fiscal policy continue to deliver results in the second half of the year? Bai Yanfeng believes that macro-control should maintain sufficient strategic focus, focus on stabilizing growth, ensuring people's livelihood and preventing risks, so as to promote sustained improvement in economic performance. "In particular, we should make good use of the new special bond issuance plan determined at the beginning of the year to continue to play an effective supporting role in economic growth; we should further optimize the business environment to create conditions for the gradual recovery of private investment and household consumption."

Source: Ministry of Finance, PRC