Following is the full text of the Report on the
Implementation of the Central and Local Budgets for 2003 and on the Draft
Central and Local Budgets for 2004, delivered at the Second Session of the Tenth
National People's Congress on March 6, 2004.
REPORT ON THE IMPLEMENTATION OF THE CENTRAL AND LOCAL BUDGETS FOR 2003 AND ON
THE DRAFT CENTRAL AND LOCAL BUDGETS FOR 2004
By Jin Renqing Minister of Finance Fellow Deputies,
The State Council has entrusted me to report to this session on the
implementation of the central and local budgets for 2003 and on the draft
central and local budgets for 2004. I'm presenting this report to you for your
examination and approval and also for comments and suggestions from members of
the National Committee of the Chinese People's Political Consultative
Conference. I. Implementation of the Central and Local Budgets for 2003
The
year 2003 was an unusual year. In the face of a complex and volatile
international situation, the unexpected outbreak of the severe acute respiratory
syndrome (SARS) and frequent natural disasters, the Party Central Committee and
the State Council responded confidently with resolute decisions. All local
authorities and government departments worked hard with one heart and one mind
to conscientiously implement the principles and policies formulated by the
central authorities and meet the requirements for financial and economic work
set at the First Session of the Tenth National People's Congress (NPC). There
was continued good momentum in economic and social development and the central
and local budgets were implemented fairly well.
National revenue exceeded
2 trillion yuan in 2003 for the first time to reach 2.1691 trillion yuan
(excluding revenue from generation of debt, both here and below). This was 278.7
billion yuan or 14.7% more than the previous year and 105.8% of the budgeted
figure. National expenditures totaled 2.4607 trillion yuan, an increase of 255.4
billion yuan or 11.6% year-on-year and 103.8% of the budgeted figure.
Expenditures exceeded revenue by 291.6 billion yuan. Total revenue in the
central budget amounted to 1.2465 trillion yuan (after allowing for the
additional 82.9 billion yuan used in export tax rebates), up 109.3 billion yuan
or 9.6% over the previous year and 104.4% of the budgeted figure. Total
expenditures in the central budget came to 1.5663 trillion yuan (including 824
billion yuan in tax rebates and subsidies for local authorities), 119.5 billion
yuan or 8.3% more than the previous year and 103.5% of the budgeted figure. The
deficit in the central budget was held to 319.8 billion yuan as approved at the
First Session of the Tenth NPC. Total revenue in local budgets amounted to
1.8082 trillion yuan (including tax rebates and subsidies granted by the central
government), an increase of 221.5 billion yuan or 14% year-on-year and 105.7% of
the budgeted figure. Total expenditures in local budgets came to 1.78 trillion
yuan ( including 61.5 billion yuan turned over to the central government), 188
billion yuan or 11.8% more than the previous year and 104.1% of the budgeted
figure. Local revenue exceeded expenditures by 28. 2 billion yuan which was to
be used in the following year.
These figures may change a little when the
consolidated final accounts are made.
The main characteristics of the
implementation of the central budget and the financial work in 2003 are as
follows.
1. Revenue continued to grow fairly fast.
The national
economy got off to a good start in 2003, but was later affected by the SARS
outbreak and natural disasters such as droughts, floods and earthquakes.
Economic growth slowed down for some time and a rather large drop in revenue
growth occurred in the second quarter. In response to these changes, authorities
of finance and tax and the Customs at all levels energetically implemented the
principle set by the Party Central Committee and the State Council that called
for unrelenting efforts to prevent and control SARS while unswervingly promoting
economic development. They promptly tightened revenue supervision and regulation
and strengthened tax collection and management in accordance with the law.
Thanks to a rapid recovery and development of the national economy, national
revenue growth maintained a good momentum. First, there was strong growth in
domestic demand and imports, which resulted in the following year-on-year
revenue increase: domestic value-added tax (VAT) increased by 105.4 billion yuan
or 17.1%; consumption tax, by 13.4 billion yuan or 12.8%; business tax, by 39.2
billion yuan or 16%; and import duties, by 111.1 billion yuan or 42.9%. Second,
the quality of economic growth was raised and the economic performance of
enterprises noticeably improved.
Corporate income tax rose by 39.9
billion yuan, or 15.9% over the previous year when calculated in comparable
terms. Third, personal incomes continued to grow, leading to a year-on-year
increase of 20.5 billion yuan or 16.9% in individual income tax, and 11.9
billion yuan or 34.2% in vehicle purchase tax.
Total central government
revenue in 2003 exceeded the projected figure by 52.4 billion yuan (after
allowing for an additional 82.9 billion yuan used in export tax rebates during
the implementation of the budget). This surplus included 7.8 billion yuan from
increased vehicle purchase tax, which was incorporated into the calculation of
revenue and expenditures in the central budget and was funded for special
purposes according to the relevant regulations. Another 7.8 billion yuan was
used to increase tax rebates and general transfer payments to local governments
in accordance with the relevant institutional rules. The final 36.8 billion yuan
was used during the year mainly for combating disasters and providing disaster
relief, developing education, health, and science and technology, supporting
enterprise reforms, improving social security, and upgrading the ecological
environment. The State Council has reported all this to the NPC Standing
Committee. The revenue in excess of the projected figures in local budgets was
used by local authorities mainly to increase expenditures for education, science
and technology, culture and health and to pay overdue wages and
salaries.
2. Finance played a greater role in macro-control and in
safeguarding the economy.
The government continued to follow the
proactive fiscal policy to promote sustained and rapid growth of the national
economy. Treasury bonds issued to finance projects totaled 140 billion yuan.
While exercising strict management over these funds, we improved the orientation
and structure of their use by giving preference to rural areas, economic
restructuring, the central and western regions, science and technology,
education, improvement of the ecological environment and public health services.
Transfer payments were increased to promote balanced development among different
regions. General transfer payments from the central budget to local governments
in 2003 totaled 191.2 billion yuan, 17. 9% more than the previous year. Special
transfer payments earmarked for social security, agriculture, science and
technology, education, health and poverty alleviation amounted to 257.7 billion
yuan, up 7.3% year-on-year.
In response to the State Council's directive to
improve fiscal systems at and below the provincial level, local governments
continued to strengthen the abilities of primary-level financial authorities to
provide adequate financial resources. To appropriately increase the incomes of
employees in government departments and institutions, we steadily implemented
the policy of adjusting the wages and salaries of their employees and the
pensions of their retirees.
The central authorities showed great concern
for people's lives and enterprises' production and operations following the
outbreak of SARS. First, 2 billion yuan was appropriated from the central budget
to set up the Anti-SARS Fund, and a policy was clearly stipulated to provide
free SARS treatment for rural and impoverished urban patients. This played a
vital role in effectively curbing the spread of the outbreak, particularly to
the countryside. Financial authorities at all levels allocated a total of 13.6
billion yuan for SARS prevention and treatment, including 2.8 billion yuan from
the central budget. The central government appropriated an additional 1 billion
yuan to improve the public health system in the second half of the year. Second,
we promptly introduced a range of preferential fiscal and tax policies to aid
industries hard hit by the SARS outbreak, such as tourism, food and beverage
service, civil aviation, railways, hotels and taxis, so that they could tide
over difficulties to resume normal operations as soon as possible. Although the
above- mentioned measures increased expenditures and reduced revenue, they
protected the health of the people, ensured the normal operations of enterprises
and promoted economic and social development.
3. New steps were taken to
solve the problems facing agriculture, rural areas and farmers.
First,
overall progress was made in the trial reform of rural taxes and administrative
charges. The trial was extended from 20 provinces to the whole country, reducing
the burden on farmers by over 30% on average. The central government earmarked a
total of 30.5 billion yuan in 2003 to support this reform. Financial authorities
at provincial level, as well as those at the city and county levels with
adequate resources, also provided some funds to support the reform.
Second, we accelerated the pace of repealing the tax on special
agricultural products on a trial basis. The tax was by and large rescinded in a
dozen provinces and municipalities directly under the central government,
including Beijing, Fujian, Guangdong, Jiangsu, Zhejiang, Anhui, Sichuan, Henan,
Shanghai and Tianjin. Third, the trial of providing subsidies directly to grain
producers was implemented in the provinces of Anhui, Jilin, Hunan, Hubei, Henan,
Liaoning, Hebei and Jiangxi and in the Inner Mongolia Autonomous Region. The
trial promoted the reform of grain enterprises, and also won the heartfelt
support of farmers in trial areas and boosted their enthusiasm for grain
production. Fourth, we implemented the policies of reducing or exempting
agricultural taxes for crop failures due to natural disasters and of
compensating areas designated for flood storage and retention. Funds were
promptly appropriated to combat natural disasters and provide disaster relief.
The central government allocated 10.8 billion yuan in 2003 to help various
localities combat natural disasters, provide disaster relief and fund
reconstruction after disasters, and 167 million people in disaster-afflicted
areas received timely government relief. Fifth, we vigorously pressed forward
with agricultural restructuring to help farmers increase their incomes. In 2003,
the central government allocated 44 billion yuan, a year-on-year increase of
13.9%, to support progress in agricultural science and technology, develop the
quality and safety system for agricultural products, fund comprehensive
agricultural development and promote development- oriented programs for
alleviating rural poverty. Sixth, the central government increased expenditures
by 6.7 billion yuan on education, health and culture. They mainly went to rural
areas to promote the development of social undertakings there.
4. More
support was provided for work related to employment and social
security.
First, greater support was given to work related to employment
and reemployment. The scope and duration of preferential fiscal and tax policies
to increase reemployment were extended, and laid- off workers who were
reemployed were exempted from 17 administrative and institutional charges. A
special fund of 4.7 billion yuan was established in the central budget for
transfer payments to support reemployment programs, which resulted in the
targets for employment and reemployment being exceeded. Second, efforts were
stepped up to ensure that living allowances for workers laid off from
state-owned enterprises and basic old-age pensions for retirees from the same
enterprises are both paid on time and in full and that low-income urban
residents receive their subsistence allowances. The central government allotted
60.8 billion yuan to guarantee the payment of living allowances and basic
old-age pensions, 13.1% more than the previous year, and 9.2 billion yuan to
help pay subsistence allowances, double the sum for 2002. These measures
basically ensured that workers laid off or retired from state-owned enterprises
received their living allowances or basic old-age pensions on time and in full
and enabled 22.35 million low-income urban residents to receive subsistence
allowances from the government. Third, more work was done to help some people
with special difficulties overcome problems in their production and lives. The
central government began making annual allocation of 1.5 billion yuan in 2003
for a special fund to help local authorities solve problems in people's lives,
especially ex-serviceman working in some enterprises. We again raised the
allowances for those entitled to special government care and preferential
treatment. Fourth, we solved the longstanding problem of obligating relevant
authorities to provide old-age insurance for employees of land reclamation
enterprises. For this purpose, the central government allocated 730 million yuan
in subsidies to the central and western regions and the land reclamation zones
under its jurisdiction (it will allocate the same amount for the same purpose in
2004).
5. Investment in social undertakings increased
significantly.
A total of 85.5 billion yuan was spent from the central
budget on education, health, science and technology, culture and sports, 9.4
billion yuan or 12.4% more than the previous year. This solved a number of
outstanding problems in the development of social undertakings. A special
investment of 2 billion yuan was made to continue the renovation of dangerous
primary and secondary school buildings in rural areas. We will continue working
hard to basically eliminate this problem in around three years. We energetically
supported the reforms of the basic medical insurance system for urban employees,
the systems for medical care and health service and for pharmaceutical
production and distribution. We strongly supported improvement of the disease
prevention and control networks and medical treatment systems for public health
emergencies at the provincial, prefectural and county levels, and also strongly
supported the pilot programs to set up a new type of rural cooperative medical
care and health service system in the central and western regions. More was
invested in key areas and projects of science and technology. Two billion yuan
was allocated for the State Natural Sciences Fund, 800 million yuan for key
state basic research programs, 4.5 billion yuan for the state's March 1986
Hi-tech Program, and 3.3 billion yuan for the knowledge innovation pilot program
of the Chinese Academy of Sciences. These efforts produced a large number of
major scientific advances and promoted the development of science and
technology. The program to send books to the countryside, national programs to
share cultural information and produce fine stage productions and other cultural
programs were launched. A special fund was set up to ensure medical care and
health service and other benefits for veteran athletes and coaches. All this
promoted the development of culture and sports.
6. The plan for reforming
the export tax rebate mechanism was smoothly introduced.
The Ministry of
Finance worked with commerce, taxation and other government departments
concerned to study the problem of unpaid export tax rebates in 2003, and
proposed reasonable, effective measures to tackle the problem at its root. The
Party Central Committee and the State Council resolutely formulated the
principle of "preventing new arrears, clearing up old arrears, improving the
mechanism, sharing the financial burden, accelerating reform and intensifying
development" to reform the export tax rebate mechanism. They adopted five
clear-cut policies in this regard. First, we will restructure export rebate
rates, retaining some of them while lowering others, with an average reduction
of around 3 percentage points. Second, total export tax rebates verified for
2003 will be taken as the base figure, and payment for the portion of export tax
rebates that exceed the base figure, if any, will be shared by the central and
local governments at a ratio of 75:25 beginning in 2004. Third, any increase in
the VAT and consumption tax on imports collected by the central government will
be used first to pay export tax rebates. Fourth, the central government will pay
the full sum of the aggregate arrears in export tax rebates due to enterprises
before the end of 2003. Fifth, the reform of the foreign trade system will be
accelerated. The portion of the VAT and consumption tax on imports collected by
the central government in 2003 that exceeded the pre-set targets, totaling 82.9
billion yuan, has all been used to pay export tax rebates.
7. Reform of
the budget management system was further deepened.
First, we continued to
deepen the reform to separate the management of revenue from the management of
expenditures. We brought 118 administrative charges collected by 30 government
departments and institutions, which included the former Ministry of Foreign
Trade and Economic Cooperation and the Ministry of Personnel, under budgetary
control. Second, the reform was further deepened to introduce departmental
budgets by requiring more departments to submit increasingly standardized
budgets to the NPC. Trial reforms to set the level of basic expenditures and fix
the allowed number of employees and funding were extended to 118 more secondary
institutions under the central government. Third, we intensified the reform to
introduce the system of centralized treasury revenue and payments, expanding the
trial implementation of the system of centralized treasury payments from the 42
central departments of 2002 to 82 in 2003. Fourth, the scope of government
procurement continued to expand, with total government procurement exceeding 150
billion yuan in 2003, 50 billion yuan more than the previous year. Fifth, we
further tightened the supervision and auditing of budgetary funds and funds
amounting to 61.2 billion yuan were verified in 2003 as being obtained through
acts that violated financial regulations and discipline. Deepened reform of the
budget management system and tightened financial supervision made budgetary
funds safer and their use more standardized and effective.
Fellow
Deputies,
In general, we met with more difficulties than we had
anticipated in implementing the 2003 budgets. The results, however, were better
than we had expected. But we are clearly aware that there are still problems we
cannot afford to ignore in implementing the budgets. First, revenue is seriously
stretched to meet expenditures and the problem is so severe that we lack the
financial resources to do many things that need to be done. Second, potential
risks arising in the course of economic development constantly impinge on budget
implementation. It is hence very difficult for us to prevent and defuse
financial risks. Third, the pattern of expenditures still needs to be adjusted
and we do not yet give more financial support to the development of social
undertakings. In some regions, especially in rural areas, people still do not
have adequate access to schools, doctors, potable water and transportation.
Fourth, primary-level authorities in some areas still have financial
difficulties, as is manifested in delayed wage payments there. Fifth,
falsification of accounts, tax evasion and fraud, and extravagance and waste
remain serious problems. The financial and economic order has yet to be further
standardized, and budgetary funds have to be used more efficiently. We must deal
with these problems conscientiously and solve them step by step by increasing
our sense of urgency and mission, enhancing our sense of responsibility when
handling financial affairs in the interest of our people, accelerating the
development of the public finance system and working energetically to improve
the socialist market economy.
II. The Draft Central and Local Budgets
for 2004
The general guiding principles for formulating the budgets and
arranging financial work for 2004 are as follows. We should take Deng Xiaoping
Theory and the important thought of Three Represents as the guide, and
thoroughly implement the guidelines of the Sixteenth National Congress of the
Party, the Third Plenary Session of its Sixteenth Central Committee and the
Central Conference on Economic Work. We should firmly establish a scientific
approach for achieving all-round, well-balanced and sustainable development of
the economy; properly balance reform, development and stability and do a better
job of coordinating development in five areas (urban and rural development;
development among different regions; economic and social development;
development of man and nature; and domestic development and opening up to the
outside world). We should continue implementing the proactive fiscal policy,
effectively strengthen macro-control, deepen the fiscal and taxation reforms,
improve the public finance system, and further promote institutional innovation.
We should work hard to increase revenue and reduce expenditures, focus on
solving outstanding problems in economic and social development, and constantly
improve people's material and cultural lives and their health.
The major
budgetary targets for 2004 are as follows. Total revenue in the central budget
is 1.3819 trillion yuan, an increase of 90.7 billion yuan or 7% over 2003 (The
performance figure of 2003 has been adjusted using comparable terms.).
Expenditures in the central budget total 1.7017 trillion yuan, a rise of 90.7
billion yuan or 5.6%. Expenditures exceed revenue in the central budget, leaving
a deficit of 319.8 billion yuan. Although the 2004 budget deficit is the same as
for 2003, it drops to 2.5% of the GDP, or 0.4 percentage points less than the
2.9% for 2003. The central budget funds for bond-financed projects in 2004 total
110 billion yuan, 30 billion yuan less than last year. This total includes 95
billion yuan listed in the central budget and 15 billion yuan to be issued by
the central government for local governments. In addition, allocations from the
central budget for investment in regular construction projects increases by 5
billion yuan. The value of treasury bonds to be issued in 2004 totals 702. 2
billion yuan, which breaks down into 367.4 billion yuan to be used by the
central government to repay the principal on domestic and foreign debts due in
2004, 319.8 billion yuan to cover this year's deficit, and 15 billion yuan worth
of bonds issued by the central government for local governments. Total revenue
in the draft central and local budgets for 2004 is 2.357 trillion yuan, 187.9
billion yuan or 8.7% more than in 2003. Total expenditures in the draft central
and local budgets amount to 2.6768 trillion yuan, an increase of 216.1 billion
yuan or 8.8%.
The deficit in the central budget for 2004 remains the same
as in 2003. Here are the main factors contributing to this decision.
Uncertainties exist in global economic development. The foundation for sustained
growth of the Chinese economy is not yet solid enough. Follow-up investment in
ongoing bond-financed projects is needed. There are a large number of accounts
in arrears in certain areas of social development. Keeping our proactive fiscal
policy stable and consistent while working to improve it will help protect,
consolidate and increase the current good momentum in economic development,
increase everyone's confidence in accelerated development and stabilize overall
reform and development. In addition, as sources of investment become more
diversified and nongovernmental investment keeps increasing, efforts to
appropriately reduce the funding for bond-financed projects and further improve
the structure of bond fund utilization will help us improve the guidance and
utilization of nongovernmental investment and release more financial resources
to support institutional innovations such as the reform of the tax system. In
using funds for bond-financed projects, we will give priorities to the following
areas. We will develop rural infrastructure, public health, elementary
education, primary-level governments, and infrastructure for people's courts and
public security, procuratorial and judicial organs. We will support the
development of the western region and the restructuring and transformation of
northeast China and other old industrial bases. We will strengthen ecological
conservation and environmental protection. We will accelerate the construction
of major water control projects such as the project to harness the Huaihe River,
and ensure the development of bond-funded projects that are under construction,
especially such major projects as the Qinghai-Tibet railway line, the
south-to-north water diversion and the west-to- east electricity
transmission.
The projected revenue growth for the whole country in 2004
is slightly higher than the expected economic growth. Here are the main factors
contributing to this decision. On the one hand, the sustained, rapid growth of
the national economy and improved tax collection and management will lay a solid
foundation for revenue growth. On the other hand, we will continue implementing
or introducing a range of preferential fiscal and tax policies in 2004 to
promote all-round, balanced and sustainable economic and social development,
support restructuring efforts and safeguard social stability. We will further
reduce the overall tariff level, increase the quotas for export tax rebates, and
implement policies to support employment and reemployment, develop the western
region, reinvigorate northeast China and other old industrial bases, encourage
the development of new and high technology industries and reduce the burden on
farmers. These policies will reduce revenue. In addition, the base figure for
revenue growth keeps increasing and has been higher than the rate of economic
growth for many years in succession. All this, plus possible difficulties in
keeping imports growing at a rate as high as for 2003, will make it even harder
for us to increase revenue significantly. Therefore, the revenue projected for
2004 is proactive, sound and realistic.
Expenditures in the central
budget for 2004 will give priority to the following areas.
1. Investment
will be increased for agriculture, rural areas and farmers.
We must
establish a mechanism that will effectively ensure a sustained increase in
farmers' incomes for a long time to come and a mechanism for guaranteeing a
steady increase in the budgetary funds for supporting agriculture and work hard
to address the problems facing agriculture, rural areas and farmers; this is an
important part of our financial work. Once again, investment has been
substantially increased in the 2004 central budget to address these problems,
with total expenditures increasing by around 30 billion yuan, or 20% over last
year. First, the reform of rural taxes and administrative charges will be
deepened and the agricultural tax system will be improved. Except for tobacco,
the tax on special agricultural products will be rescinded in 2004 and the
overall agricultural tax rate will be reduced by over 1 percentage point, with a
greater reduction for major grain producing areas and grain producers. This may
reduce the burden on farmers by as much as 11.8 billion yuan. Agricultural taxes
will be rescinded in five years. In light of the specific difficulties in local
budgets, the central government will provide appropriate transfer payments to
offset revenue decreases in local budgets, especially in budgets of major grain
producing areas and the central and western regions, brought about by
eliminating the tax on agricultural specialty products and decreasing the
agricultural tax rate. Funds totaling 39.6 billion yuan in the form of transfer
payments from the 2004 central budget will be set aside for the reform of taxes
and administrative charges in rural areas, a year- on-year increase of 9.1
billion yuan. In addition, more support will be given for efforts to reduce
rural debts, promote institutional reforms in town and township governments and
improve the system of compulsory education in rural areas. Second, we will
promote the reform of the system of grain distribution to make it more
commercial. We will give subsidies directly to grain producers in the major
grain producing areas instead of subsidizing them indirectly through grain
distribution links. Ten billion yuan from the grain risk fund will be given
directly to grain producers in 13 major grain producing provinces in 2004.
Third, more budgetary funds will be used to develop agricultural infrastructure,
develop forests for ecological conservation, make advances in agricultural
science and technology, train farmers, develop the system of quality and safety
standards for agricultural products, expand overall grain production capacity,
provide relief for agricultural disasters and fight poverty.
2.
Investment will be increased for employment work and social
security.
Employment and social security affect the vital interests of
the people, the stability of society and the country's overall development. More
support will be given to employment work and social security in the 2004 central
budget. First, employment and reemployment work will be strongly supported.
While conscientiously carrying out the preferential fiscal and tax policies
formulated by the central authorities to promote employment and reemployment, we
plan to increase reemployment assistance funds by 3.6 billion yuan, 76.6% more
than last year. Second, we will energetically support efforts to guarantee that
living allowances for workers laid off from state-owned enterprises and basic
old-age pensions for retirees from these enterprises are paid on time and in
full and ensure that low- income urban residents receive their subsistence
allowances. To achieve these goals, we plan to allocate 77.9 billion yuan from
the 2004 central budget. In addition, we will continue to improve the social
security system and raise funds for social security through diversified
channels. We will better coordinate the implementation of the reemployment
policy and social security programs, including the "three-stage guarantee" for
laid-off workers. On the basis of a review of the pilot program to improve urban
social security systems in Liaoning Province, we will improve its contents and
methods and extend it to Jilin and Heilongjiang provinces. Third, in order to
promote economic restructuring, a number of enterprises will be closed down or
declared bankrupt in accordance with the law. We will work harder to free
enterprises from the obligation to operate social programs and allocate 17
billion yuan in subsidies for enterprises that close or go bankrupt. We will
also provide active support and assistance to people having special
difficulties.
3. Investment will be increased for education, health,
science and technology, culture and sports.
We will improve compulsory
education, especially in rural areas. We will accelerate the program to
basically make nine-year compulsory education available throughout the western
region and basically eliminate illiteracy among young and middle-aged people
there. We will improve the system under which most responsibility for managing
rural compulsory education goes to county governments, increase transfer
payments to support compulsory education in poor counties, continue to carry out
the second phase of the program to renovate dangerous primary and secondary
school buildings in rural areas and the program to promote modern distance
education, and distribute free textbooks in more areas. We will speed up the
development of systems for disease prevention and control and for medical
treatment in public health emergencies, raise the level of public health
services and our ability to cope with public health emergencies, and improve
medical and sanitation conditions in the countryside. We will support efforts to
successfully carry out trials to develop a new type of system for rural
cooperative medical care and health services. We will support the development of
a state system for scientific and technological innovation and the formulation
of the state medium- and long-range plan for developing science and technology.
We will facilitate reform of the management system of science and technology,
and promote innovation in mechanisms and the implementation of key science and
technology projects and the application of scientific results in production. We
will vigorously develop undertakings in advanced culture and develop
culture-related industries. We plan to allocate 95.5 billion yuan from the 2004
central budget for education, health, science and technology, culture and
sports, a year-on-year increase of 10 billion yuan, giving priority mainly to
rural areas.
4. Transfer payments to local governments will be increased.
The central government will again increase transfer payments to local
governments in 2004, especially to governments in the central and western
regions. In addition to 427.7 billion yuan in tax rebates and structural
subsidies, the central government plans to grant local governments 513.3 billion
yuan in transfer payments, an increase of 64.4 billion yuan over last year in
comparable terms. Of this amount, 223.8 billion yuan will come in the form of
general transfer payments, a rise of 32.6 billion yuan compared to last year. In
addition, a special task force will be organized to thoroughly investigate and
study the causes of financial difficulties at the lower levels of government,
and propose specific measures to eliminate them as soon as possible on a type-
by-type and step-by-step basis.
5. Support will be given to promote the
reform of the tax and other systems.
First, we must ensure that reform in
the mechanism of export tax rebates is carried out smoothly. The target for
export tax rebates set in the 2004 central budget is 210.8 billion yuan, and
revenue from the increase in the VAT and the consumption tax on imported goods
will be used first to pay export tax rebates. Local governments also need to set
adequate targets for export tax rebates. Financial and taxation authorities at
all levels must closely watch for any new developments and problems that may
arise and promptly take appropriate steps to better manage export tax rebates to
avoid the reoccurrence of arrears. The central government will first pay the
interest on the amount of export tax rebates in arrears accumulated over the
years before formulating measures to fundamentally eliminate them. Second, we
will actively and appropriately work to change the "production VAT" to a "
consumption VAT." We will work conscientiously to ensure success in the trials
of this change currently under way in some industries in northeast China. The
results of these trials will be promptly analyzed to improve the plan for the
change and create the conditions for carrying it out throughout the country.
Third, we will accelerate the formulation of policies and plans to make the
corporate income tax the same for both Chinese and foreign enterprises and to
reform other tax systems. Fourth, we will support the reform of the financial
system to prevent and reduce financial risks, focusing on introducing a
shareholding system in the Bank of China and the China Construction Bank and
increasing subsidies for losses incurred by rural credit cooperatives due to
inflation-proof deposits. Fifth, we will support reforms in the investment
system and in power, telecommunications, civil aviation, railways, postal
service and urban public utilities.
6. We will guarantee normal operation of
governments at all levels.
In order to strengthen government authority
and ensure that government employees are paid on time and in full, we plan to
allocate an extra 11.8 billion yuan to cover pay raises for employees of
government organs and institutions. We will allocate an extra 3 billion yuan to
increase benefits for retired army officers who are taken care of by governments
at all levels and to cover the additional expenses resulting from policy changes
involving those entitled to special government care and preferential treatment.
An additional 1.58 billion yuan in subsidies will be allocated from the central
budget to people's courts and local public security, procuratorial and judicial
organs. Expenditures for national defense will rise by 21.83 billion yuan, 11.6%
more than last year, in order to improve the defensive combat readiness of the
armed forces under hi-tech conditions and to raise the salaries of army
personnel and the pensions for ex-servicemen.
In addition, we must work
hard to ensure adequate funding for other expenditures that have a direct
overall bearing on reform, development and stability.
III. Working
Diligently to Ensure Satisfactory Implementation of the 2004 Budgets
Success
in the financial work and satisfactory implementation of the budgets for 2004
are essential to deepening reform, opening wider to the outside world and
promoting development. To attain this goal, we will concentrate on the following
tasks.
1. We will strengthen revenue collection and management in
accordance with the law to ensure steady revenue growth.
First, we will
resolutely safeguard the uniformity, authority and sanctity of tax laws. We will
resolutely stop introduction of unauthorized preferential taxation treatment or
preferential tax policies in disguised forms. Collection of taxes must be
promptly resumed when any preferential tax policy expires. Second, we will
tighten tax collection and management in accordance with the law. We will
severely crack down on smuggling, tax evasion and fraud and all other
tax-related crime. We will ensure that taxes are collected in accordance with
the law and that all taxes due are collected without exception. On the other
hand, we will on no account collect taxes that are not yet owed. Third, we will
standardize non-tax revenue management. In particular, non-tax revenue such as
income obtained from land-use fees will be put under budgetary control or in
special accounts. We will continue to rectify unauthorized collection of
fees.
2. We will tighten management of expenditures and hold down
expenditures.
We will vigorously promote the work style of hard work,
plain living and building the country through diligence, and continue to follow
the policy of zero-growth for all general expenditures budgeted for 2004. We
will voluntarily safeguard the sanctity and authority of the budgets and
diligently implement the budgets as approved by the people's congresses at all
levels. We must strictly tighten control over the construction of office
buildings and training centers built for Party and government departments, and
intensify efforts to solve the root causes of the problems of overdue
construction funding on government-funded projects and unpaid wages for migrant
rural workers. No budgetary funds should be allocated for the wide variety of
inconsequential festivals, ceremonies and forums. We will work to speed up
development of the Government Financial Management Information System and make
full use of modern management methods to strengthen management and oversight,
reduce loss and waste and standardize the financial order. We will energetically
promote the reform to commercialize support services in government organs. We
will improve the system of receptions for government employees on official
business, and scientifically set the allowed range for operating expenses of
institutions.
3. We will deepen the reform of the budge management system
and perform our official duties in accordance with the law.
We will
continue to expand the scope of the reform, improve reform methods and deepen
the reform. We will work out a scientific system for classifying government
revenue and expenditures as soon as possible and continue standardizing
administrative charges. In order to effectively improve the performance of
budgetary expenditures, we will conduct studies on how to set up a scientific
evaluation system for performance budget, standardize methods for determining
the proper number of employees and funding, and improve the way project
expenditures are managed. We will conscientiously carry out the Administrative
Permission Law and further review, standardize and streamline administrative
examination and approval procedures. We will improve fiscal and tax laws and
regulations. We will consciously subject ourselves to the oversight of all
sectors of society so that fiscal management constantly becomes more
standardized and transparent.
4. We will improve our work style to serve
overall development.
Financial authorities at all levels should be
realistic and pragmatic and work to effectively improve their style of work.
First, we must always keep firmly in mind the overall situation. In considering
issues and handling matters, especially in determining revenue and expenditures,
we must always keep the overall situation in mind and bring our thinking and
action in line with all decisions and plans of the central authorities. Second,
we should always maintain a proactive attitude. We must give top priority to
development in governing and rejuvenating the country and take full advantage of
the role of public finance. We must address the concerns of the people and the
pressing needs of development, deal with urgent problems quickly, and take
special measures when needed. Third, we must be fully aware of the need to be
realistic and pragmatic. We must speak the truth, actually do our work, make
calculations accurately, strive for effective results, and never do things for
show or just go through the motions. Fourth, we must foster an attitude of
public service. We must actively communicate and coordinate with others to
sincerely serve the people, lower level organizations and government
departments. Fellow Deputies,
Implementing the budgets and carrying out
the financial work for 2004 will be an arduous task and a great responsibility
for us. Under the leadership of the Party Central Committee with Comrade Hu
Jintao as General Secretary, we will hold high the great banner of Deng Xiaoping
Theory, fully implement the important thought of Three Represents, follow the
guidelines set down at the Sixteenth National Congress of the Party and the
Third Plenary Session of its Sixteenth Central Committee and the requirements
for our economic and financial work set at the Second Session of the Tenth NPC,
consciously subject our financial work to the oversight and direction of the
people's congresses, earnestly seek and heed the comments and suggestions of the
committees of People's Political Consultative Conference, lift up our spirits,
handle financial affairs in accordance with the law, be realistic and pragmatic,
and work diligently to attain the magnificent goal of building a moderately
prosperous society in all respects.
