The Central Committee of the Jiusan Society holds that in a market economy, there are two ways to boost regional growth: increasing central government expenditure on underdeveloped regions or restructuring the existing tax system to reduce taxes in those regions. The society -- one of China's non-Communist parties -- submitted a proposal suggesting that the latter method be implemented.
Because the less-developed regions are in financial straits, the proposal suggests only reducing taxes levied by the central government. At the same time, local governments should be authorized to adjust local tax rates and inclusions, thus allowing incentives to be provided to encourage investment in the area.
The State Administration of Taxation replied that it has included adjustments to taxation and incentive policies in its new reforms. It agrees that such reform should embody the concept of balanced development of all regions. The administration plans to implement some new tax incentives in the western and northeastern regions, both target development areas.
(China.org.cn March 11, 2005)
