More local autonomy to be given on taxes

Beijing: China will give local governments more say on how much taxes they collect, Finance Minister Xie Xuren wrote in a commentary published on the website of Qiushi, the official magazine of the Communist Party.

"For general local taxes, the central government will allow provincial governments to adjust categories and rates of taxes, as well as give them the power to exercise tax relief," Xie wrote in an article addressing changes to China's tax system in the five-year plan starting in 2011.

The overhaul has the potential to help local governments pay for expenses such as education while reducing their dependence on land sales and loans. Local governments collect about 30 per cent of China's overall revenue, the state-run Shanghai Securities News said yesterday.

Structure

China's tax structure is partly responsible for the country's rapid economic growth because local governments must build factories and other revenue-generating projects, said Zhang Junkuo, head of the development strategies department at the State Council's Development Research Centre.

"These can create more taxes, and more tax means more revenue for local governments," Zhang told reporters on Thursday.

The government in Beijing will keep control over central taxes to "maintain the overall national interest," Xie wrote without elaborating. China's central taxes include those at customs and levies on centrally-owned state companies.