Tax reform boosts growth

Vice-Premier Li Keqiang stressed recently the importance of replacing business tax with a value-added tax in more fields such as post and telecommunications, railways transportation and construction.

Decision-makers seem determined to push this reform forward in more areas

Shanghai piloted this reform in some industries from Jan 1, and the pilot reform is being carried out in 10 provinces and cities in the fields of transportation and some modern service industries from Aug 1 to the end of this year.

Li's words send out a message that it is only a matter of time for the central authorities to implement the reform nationwide.

This reform can relieve the tax burdens of many industries and promote their faster development, especially the modern service sector that is of great importance to China's transformation of its economic growth model and industrial structure.

It is a necessary reform to modernize China's taxation system and can also be regarded now as a measure to boost national economic growth.

Since business tax used to be collected by local governments, after the reform starts nationwide, the central government and local governments must come up with a new way of sharing value-added tax revenue to replace the former three-to-one ratio between the central and local authorities that has been in place since 1994.

The authorities should also avoid increasing some sector's tax burdens in this reform by strengthening supervision and regulation.

Translated by Li Yang from China Business News