Large-scale tax cuts best way to support non-public sector

The State Administration of Taxation organized a meeting with representatives of 12 private enterprises in Beijing last week to solicit their suggestions on how to ease their tax and fee burdens. Wang Jun, head of the tax administration, pledged to carefully study the entrepreneurs' suggestions and provide them with better services and more supportive policies. Beijing Youth Daily comments:

It is good to see the taxation authority showing its earnestness in striving to better serve privately-owned businesses.

Reducing the tax burden on private enterprises can provide them with more direct support than easing their difficulties in obtaining financing. It only needs the government's decision to cut the tax and administrative fees they have to pay, while the State-run banks have to be persuaded to lend to private companies because they prefer to lend to State-owned companies as they are more confident of their repayment capabilities.

But while it has been a well-defined goal of government work in recent years to reduce the tax burden on private enterprises, the tax revenue has still grown substantially.

The fast increase of government revenue is partially caused by the more stringent efforts to prevent tax evasion. But there still remains great room for further tax reduction.

The reduction of tax and fees for private enterprises should be a long-term government task, rather than a storm-style campaign. The taxation departments need to carry out bigger tax cuts and more effective measures particularly for some small and micro-sized businesses, which face mounting pressures.

China's State-owned enterprises are strong and will continue to pay tax. The reduction of tax revenues from private enterprises after the implementation of large-scale tax reductions will not adversely affect the State even if it reduces the total amount of taxes within a certain period of time.

In particular, small and micro-sized businesses should be tax exempt in a bid to help some of them overcome the difficulties they face in the current challenging environment.

Against this backdrop, it is necessary for the State Administration of Taxation to adjust the targets and work performance evaluation indexes of local taxation departments, because some grassroots taxation officials tend to exhaust all means to over-fulfill their quota, spurred by the old idiom of the more the better.