China is mulling bigger tax cuts and other fees reduction after a slew of policies it has released recently, according to a report from the China Securities Journal newspaper on Monday.
The further move involves adjusting the value-added taxation (VAT) trimming three brackets to two, as well as reducing VAT taxation rates and social security contribution rates, the report said.
"To adjust the VAT collecting brackets from three to two will better the implementation of the principle of neutral tax deduction. The move will give a more balanced influence of different industries," Zhu Daqi, a professor of tax law at Renmin University of China in Beijing, told the Global Times on Monday.?
Official data showed that the previous tax reduction methods have been gradually released and have taken effect. According to the data of the?Ministry of Finance, in September, the year-on-year growth of national general public budget revenue and tax revenue both hit a new low, and the domestic VAT growth rate has turned to negative, down 1.2 percent year-on-year.
"Taxation reduction undoubtedly reduces the burden on market players, aligns with a series of other economy stimulus measures and it will boost the economy," said Zhu.
"Indirect tax could be transferred to other market players, such as consumers, therefore the burden of higher VAT may eventually fall on consumers, and weaken their purchasing power," Zhu said.
