“More tax cuts and lower administrative fees for small and micro-sized businesses is a kind of proactive fiscal policy which can help to adjust income distribution,” Premier Li Keqiang said at the State Council Executive Meeting on Feb 25.
The Premier stressed the importance of supporting small and micro-sized enterprises — which can make proactive fiscal policy more effective — adding that increasing the financial deficit is also necessary.
“Life is not easy for many rural residents who run small shops and sell goods at a low price,” Premier Li said, recalling a recent visit to a county in Guizhou province before the Spring Festival. He said that preferential policies can help to boost economic vitality and creativity.
The Premier also said that tax cuts and supportive policies released last year played an important role in maintaining a steady growth in employment, adding that “it is our responsibility to support the development of small and micro-sized enterprises even when facing the pressure of a slowing economy.”
He asked relevant ministries to organize inspections following the introduction of the policies. “Judging from the results of last year’s inspection, there is a gap between the actual results and our expectations,” he said.
“The number of newly registered enterprises skyrocketed because of the commercial system reform,” the Premier also said, adding that the authorities should do their best to “keep these enterprises alive.”
Premier Li said that tax breaks are essential for small and micro-sized enterprises — and the implementation of the policies should be monitored.
Unemployment insurance tax rates will be lowered, allowing employers and employees to save more than 40 billion yuan every year. And the Premier added that ministries should do their utmost to offer more support to enterprises.
“We are confident about the economic outlook as the middle and western regions of the country can be further developed — and we have not yet fully implemented many of our policies in innovative macroeconomic control,” the Premier said.
Additionally, government revenue may be temporarily reduced due to the tax cuts and lowered administrative fees — but these moves can help to create more tax sources in the long term.