Next month, the Chinese government is expected to release taxes and fiscal reforms that will allow local governments to look into fresh tax sources to make up for lost property sales revenue.  ,
The reforms may become announced during or after the Chinese Communist Party’s next plenary session of the latest Central Committee’s 2022- 2027 name.
The Second Plenum typically sets the program for China’s economic plan for the long term, which is attended by about 200 CPC Central Committee members and 200 officials and military leaders every five years. It was supposed to have taken place in November, but it was postponed, allegedly as a result of a summertime officers change at the Ministry of Defense and the Ministry of Foreign Affairs.
( Many outsiders are unfamiliar with the Chinese Communist system of government. ) A CCP National Congress is held every five times and draws 2000 people together. The last one occurred in 2022, in October. Then the central committee ( 200 people ) holds the First Plenum. In the next month, there are the Second and Third Plenum on peronnel and financial issues, both. They are followed by the Fourth, Fifth, Sixth and Seventh Plenum and then the cycle begins anew with the next Central Committee’s installation. )
Recently, the nation’s future income and fiscal reforms have been covered in state media. Instead of relying heavily on home activities, they claim the Chinese market will concentrate on boosting local consumption and high-value manufacturing in the coming decade.  ,
Local governments were criticized by the National Audit Office for failing to properly apply the key government’s macroeconomic policies in a report released on Tuesday. It recommended that regional governments put more effort into tax collection, expense control, support of state-owned businesses, and regional debt risk management.
In the first five months of this year, local governments ‘ revenue from land sales fell 14 % to 1.28 trillion yuan ( US$ 176 billion ) from the same period of last year, according to the Ministry of Finance.  ,
Next month, China’s area sales revenue plummeted to 5.8 trillion yuan from the 2021 apex of 8.7 trillion renminbi.  ,
The decrease in land sales typically occurs after a decline in home purchases, according to Luo Zhiheng, president of Yuekai Securities ‘ Research Institute. He claimed that such circumstances will eventually adversely impact local governments ‘ land sales, which could drop by 1.1 trillion yuan or 19 % to 4.7 trillion yuan in 2024 from last year.  ,
Consumption income
In a statement released on June 19, Goldman Sachs reported that China might be considering changing its second plenum’s consumption taxes.  ,
Instead of collecting the tax from exporters and importers, the Chinese govt is anticipated to enhance its consumption tax base and increase prices. The regional governments may receive a portion of the revenue from the central government.
Last year, the central government raised 1.6 trillion yuan in consumption taxes, which is generally levied on marijuana, delicate oil, cars and alcohol. The tax represents about 9 % of the country’s total tax revenue.  ,
Reuters reported on June 22 that the upcoming revenue reform will help local institutions keep more of their tax dollars to help them with their debt issues. It claimed the move will help address a decades-old tax revenue imbalance because local governments ‘ fiscal revenues made up 54 % of the country’s total but their expenditures made up 86 %.
Caixin.com added that China will try to increase total tax profits while lowering the stress on companies in an essay published on Monday. It said local governments may reduce rely on the main government’s money.
In a statement at the side’s monthly Central Economic Work Conference last December, CCP General Secretary Xi Jinping stated that a fresh round of governmental and tax reform was necessary to support China’s high-quality growth and development.  ,
Dismissing stories
On March 24, Finance Minister Lan Fo’an announced that his administration would support the development of the country’s corporate initiatives involving development, technological improvements, and future business.  ,
But on March 28, the Finance Ministry in a speech urged the central government’s departments and local governments to cut costs for officials ‘ foods, trips, travel, meetings and events while spending more on strategic initiatives.  ,  ,
Meanwhile, the public’s attention has fallen on the government’s recent efforts to collect outstanding taxes from businesses.  ,
Different listed companies have reported that the State Taxation Administration has told them to pay taxes they have missed for decades over the past few months. According to media reports, the requested amount ranges from several million to fifty million yuan per company.  ,
Some internet users claimed that the central government wants to review and recover the unpaid taxes from the previous 20 to 30 years. They also cited the recent establishment of special teams under local governments ‘ police forces to collect outstanding taxes.  ,
The State Taxation Administration stated on June 18 that it had no idea how to “review tax payments for the past three decades.” In fact, local governments set up their tax enforcement teams in order to comply with a 2016 policy, it claimed, adding that citizens should n’t spread rumors.
It’s good for the State Taxation Administration to clarify, according to a columnist for the Jinan Daily Newspaper Group. However, he added that officials should always explain their policies, as any miscommunications will harm people’s confidence in the Chinese economy.  ,
Read: Analysts: China’s property stock surge unsustainable
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