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Meeting the Press
Cover Stories Series 2012> NPC & CPPCC Sessions Wrap-Up> Meeting the Press
UPDATED: March 12, 2012 NO. 11 MARCH 15, 2012
Economic and Social Priorities

OPERATING UNDER CAPACITY: Only two men work at a production line of a small appliance components factory in Wenzhou, east China's Zhejiang Province. Many small and micro-enterprises are on the verge of bankruptcy because of rising material and labor costs and difficulties in financing (HAN CHUANHAO)

Proactive fiscal policy

Xie Xuren (WEI YAO)

Xie Xuren: China will continue to implement a proactive fiscal policy this year to maintain the fiscal policy's consistency and stability and make it more flexible and prospective.

This year will see more tax reductions to mitigate tax burdens of enterprises and ordinary people.

The effect of the amended Individual Income Tax Law, which raised the monthly tax exemption threshold from 2,000 yuan ($307.7) to 3,500 yuan ($538.5) and was implemented in September 2011, will show results this year.

Efforts will be made to mitigate the tax burden of small and micro-companies, such as levying half income tax on them and extending a trail taxation system that replaces sales tax with value-added tax to avoid duplicate taxation. Since January 1 this year, we have been levying lower tariffs on over 730 kinds of imported commodities to increase imports of energy and resource products, advanced equipment, and key components. We'll cut the value-added tax for distribution of agricultural products like vegetables and alleviate burden on logistics companies. We'll also eliminate administrative fees on enterprises.

We will further increase people's income and enhance their spending power; adjust the structure of fiscal expenditure to make sure more money will be spent to improve people's well-being; and accelerate economic restructuring and the transformation of economic growth model, and balance regional development.

Supporting SMEs

In recent years, we have made several favorable policies for supporting development of small and medium-sized enterprises (SMEs), especially small and micro-enterprises.

Last year, we strengthened our supporting efforts. We increased the amount of special funds for small and micro-enterprises to 12.87 billion yuan ($2 billion) and we offered preferential tax policies.

While making government purchasing plans, a certain proportion was saved for SMEs to make sure they were involved in the bidding process. Large and medium-sized enterprises were also encouraged to cooperate with small and micro-ones to bid for government purchase.

We announced an end to 22 kinds of administrative fees for small and micro-enterprises, which has been implemented since January 1, 2012. We also guided financial institutions to support SMEs.

Many preferential fiscal and taxation policies issued later last year have taken effect since the beginning of this year. So we have to make sure they are implemented without delay. Meanwhile, this year we'll continue to improve structural tax reduction policies, giving them more financial aid, set up a development fund to encourage venture capital and other social funds to increase their support for small and micro enterprises, further eliminate inappropriate charges, research on policies of financing guaranty's healthy development and guide financial institutions to provide more support.

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