China to increase tax and fee cuts next year to support struggling businesses, after cutting an estimated 1,000 billion yuan ($ 156.9 billion) in taxes and fees for the whole of 2021, the finance ministry announced on Monday.
Experts said further reducing the tax burden on businesses should play a key role in helping the economy withstand short-term downward pressures and boost long-term growth momentum.
“We will implement tax and fee cuts with greater intensity to energize market players,” the ministry said in a statement on Monday after a meeting that defined the priorities of the tax authorities. in 2022.
The ministry will step up its political support for hard-hit small businesses, award rewards to demonstration areas using inclusive finance, and support a new range of ‘little giants’ or leading small and medium-sized businesses specializing in niche sectors and owning technologies, according to the press release.
Official data showed that China’s tax and fee cuts totaled 910.1 billion yuan in the first three quarters. The statement said that number is expected to reach 1,000 billion yuan for the entire year.
Wu Chaoming, chief economist at Chasing Securities, said that a larger scale of tax cuts would help manufacturers and small businesses resist potential cash flow risks and foster a new boost in economic growth with a policy focused on the manufacturing sector.
“More political support is needed to support the recovery of medium, small and micro enterprises, individual businesses and manufacturers,” Wu said, adding that they were under pressure from COVID-19 uncertainties, high commodity prices and lower market demand. .
The ministry also pledged in the statement to ensure an appropriate intensity of tax expenditures, accelerate the pace of spending and optimize the spending structure to ensure funding of national strategic tasks.
Efforts will also be stepped up to make good use of special local government bonds, support up-front infrastructure investments, improve the structure of income distribution and resolve the implicit debt risks of local governments, the statement said. .
The statement came amid a growing number of political signals that China will increase its budget support to the economy in the coming year, especially when it comes to helping struggling businesses. , increase domestic demand and facilitate industrial upgrades.
The Central Economic Labor Conference, an annual meeting that set China’s economic policy agenda for 2022, recognized that the country faces triple pressures of demand contraction, supply shocks and expectations. weaker ones and actions needed to preserve macroeconomic stability.
An executive meeting of the State Council earlier this month decided to prioritize manufacturing companies when implementing tax and fee cuts and to increase additional tax deductions on spending. research and development to stimulate technological innovation and industrial upgrades.
The ministry statement also said that China reduced its overall tariff level to 7.4% this year. By 2022, the ministry will further deepen international economic cooperation, engage more in major global issues and support high-quality development under the Belt and Road Initiative.
Chen Jia contributed to this story.