Reforms of the fiscal and tax systems have been deepened.

We introduced a number of new reform measures in an orderly manner and improved mechanisms related to their implementation, ensuring that these reform measures took firm root.

First, we accelerated the reform of the budgetary management system. We transferred local educational surcharge and ten other items from the budgets of government-managed funds into general public budgets. We drew up management regulations for the budgets of central state capital operations, transferred more funds from such budgets into general public budgets, and established a mechanism for making transfer payments from the budgets of central government state capital operations to the budgets of local government state capital operations. We moved forward with medium-term financial planning. We made further progress in organizing and integrating special transfer payments, cutting the number of items from 150 in 2014 to 96 in 2015. We established a standardized mechanism for local governments to secure financing through bond-issuance, placed local government debt under budgetary management by category, and imposed ceilings for such debt. All local government bonds are now issued and repaid by their respective provincial governments. We enacted regulations and operational guidelines for the preparation of government financial reports, published basic principles on government accounting, and revised the general fiscal budget accounting system.

Second, we deepened tax reforms. We carried out research on a plan for implementing trials of replacing business tax with value added tax (VAT) in all sectors and a reform plan for taxing personal income on the basis of both adjusted gross income and specific types of income. We further expanded the coverage of ad valorem taxation, extending it to the reform of resource taxes on rare earths, tungsten, and molybdenum. We carried out research relating to the excise tax reform plan and improved excise tax policies. We intensified efforts to review and standardize fees and charges levied on businesses.

Third, we made steady progress in the reform of the fiscal system. We improved the mechanism for sharing the cost of export tax rebates between the central and local governments. We studied and moved ahead reform of the division of administrative authority and spending responsibilities between the central and local governments. As the tax reform progressed, we worked promptly to draw up a transitional plan for adjusting the division of revenue between the central and local governments.