Full Text: Report on China's central, local budgets

5. Progress in fiscal and taxation reforms

We optimized the structure of transfer payments, increased the size and proportion of general transfer payments, and combined and streamlined special transfer payments. We improved the method of distributing transfer payments to ethnic minority areas and the system of transfer payments to functional ecological zones, and gradually increased transfer payments to cities once dependent on now-depleted mineral resources. We established a sound mechanism for ensuring basic funding for county-level governments, and enhanced the capacity of primary-level governments to provide public services. We carried out the reform to place county finances directly under the management of provincial-level governments in 970 counties in 27 provincial-level administrative areas, and to put township finances under the management of county governments in 28,600 towns and townships. We improved public finance budgets, comprehensively compiled budgets for central and local government-managed funds, continued to expand trials of the budget system for state capital operations, and started compiling budgets for social security funds on a trial basis. We deepened the reform of budget management systems, such as departmental budgeting, centralized treasury collection and payment, and government procurement. We conducted trials of the reform of resource taxes first in Xinjiang and then in other parts of the western region. We extended urban construction and maintenance taxes and education surcharges to foreign enterprises and nationals on the same basis as their domestic counterparts. We energetically pressed forward with the reform of the income distribution system, fully implemented the policy of linking the pay to performance for teachers in compulsory education, and accelerated implementation of the policy to institute a performance-based salary system in public health institutions and community-based medical and health care institutions.