The government deficit for 2016 is projected to be 2.18 trillion yuan ($335 billion), an increase of 560 billion yuan over last year, Premier Li Keqiang earlier said in this year's government work report. China also raised its 2016 deficit target to 3 percent of GDP, in an effort to bolster government spending and ease enterprises' tax burden.
In terms of reducing taxes and fees, the State Council has held several meetings to discuss related strategic planning. Let's take a look at a list of measures taken to reduce taxes and fees so far this year.
1. Value-added tax reform
A business tax to value-added tax pilot began with transportation and certain service industries in Shanghai in 2012, and has been gradually expanded to cover more sectors and areas.
Beginning May 1, the government extended the policy to cover the construction, real estate, finance and consumer services sectors. They were the last four sectors still taxed based on their revenue.
Nationwide, the country expects the reform to save businesses
2. Reducing rate of pension and housing provident funds
According to a government routine meeting held on April 13, the required contribution rates of the pension insurance, unemployment insurance and housing provident funds will be lowered in a two-year period starting May 1.
Under the policy, enterprises that contribute more than 20 percent of the pension insurance payment can reduce the rate to 20 percent, while those in provinces that see sufficient funds can lower the rate to 19 percent. In addition, the rate of the unemployment insurance will range between 1 percent and 1.5 percent, down from the previous 2 percent.
The new policy's biggest effect is to relieve the burden on businesses. The Ministry of Human Resources and Social Security estimated it will save businesses 38.6 billion yuan a year, if the measures are put in place.
3. Further cutting government funds
China will further cut government funds to reduce financial burden on the public, according to a government routine meeting held on Jan 27.
The government reduction streamlined and optimized a total of 13 government funds in early February. Moves of such kind will reduce financial burdens worth 26 billion yuan ($3.96 billion) for enterprises and individuals this year.
Government-managed funds set up without authorization will be abolished; the collection of contributions to certain government-managed funds will be suspended, and some of these funds will be consolidated.
