CCTV:

Recently, some local governments released their fiscal revenue data for April, and the decline was relatively large. How was the national fiscal revenue and expenditure data, please? Thank you.

Xu Hongcai:

Thank you for your question. I will answer it. Everyone is very concerned about this issue, and I will elaborate on the situation.

Following the decisions and arrangements of the CPC Central Committee and the State Council, a new package of tax-and-fee policies was implemented this year. As I said earlier, and Mr. Wang also said just now, this year's tax rebates and cuts are expected to reach 2.5 trillion yuan, among which VAT credit refunds will be 1.5 trillion yuan. On the one hand, this is strong support for enterprises to reduce their burdens and bail them out of difficulties; on the other hand, it will cause a decrease in fiscal revenue. In accounting, our tax rebates are handled by offsetting revenue, rather than by utilizing financial subsidies or increasing financial expenditures. Therefore, Mr. Wang just mentioned that the figure of VAT credit refunds is to be written off based on the existing fiscal revenue. April was the first month for the implementation of large-scale VAT credit refunds. The policy effects were released in a concentrated manner. Enterprises were very active, and tax departments also worked very hard. Over the month, the national VAT credit refunds amounted to about 800 billion yuan, quite beyond our expectation. The 800 billion yuan was treated as a deduction from fiscal revenue, so what's the proportion if compared with the previous year? We compared it with the fiscal revenue in April 2021, and found that 800 billion yuan were equivalent to 37.5% of that month's revenue. That is to say, with the implementation of VAT credit refunds, the revenue in April would drop 37.5%, which is calculated for the whole country. The drop will be more significant in regions with advanced manufacturing, especially in some eastern provinces. That is to say, it will exceed 37.5%. Due to the large impact of VAT credit refunds, the fiscal revenue from January to April cannot be compared with that of the previous year. Of course, in addition to VAT credit refunds, we also have other tax and fee reductions. I just mentioned 1.5 trillion yuan in VAT credit refunds, and there are 1 trillion yuan in additional tax and fee reductions. These tax cuts and some tax deferral measures will also have an impact on the fiscal revenue in the January-April period.

After deducting the 800 billion yuan of VAT credit refunds, the national fiscal revenue increased 5% in the first four months, which was lower than the increase (8.6%) during the January-March period.

In terms of tax types, from January to April, the accumulated domestic VAT increased 1.8% after deducting VAT credit refunds; the domestic consumption tax grew 15.5%; the VAT and consumption tax of imported goods — the VAT and consumption tax collected by the customs — increased 17.8%; the corporate income tax grew 5.4%; and the export tax rebates were 153.3 billion more than the first four months of last year, an increase of 28.4%.

From January to April, expenditure in the national general public budget increased 5.9% over the same period last year, accounting for 30.3% of the budget. Expenditures in key areas such as people's livelihood have been effectively guaranteed. The essential expenditures in science and technology, agriculture, forestry and water conservancy, health, social security and employment, and education increased 15.5%, 12.9%, 7.5%, 4.4%, and 4.1%, respectively. What needs to be pointed out, in particular, is expenditure on the issuance of special bonds in the budget of government-managed funds. The issuance of local government special bonds totaled 1.11 trillion yuan, an increase of 1 trillion yuan over the same period last year. This has played a positive role in expanding effective investment and effectively stabilizing the macroeconomic market. This is the situation in the entire country.

From a local perspective, after deducting VAT credit refunds, local fiscal revenue increased 5.4% during the January-April period. Among the 31 provinces (autonomous regions and municipalities), 23 saw increases and 8 witnessed declines.

Of course, it should also be noted that VAT credit refunds will bring a reduction in local fiscal revenue. Although we just calculated and compared it in fiscal statistical methods and dimensions, implementing VAT credit refunds will definitely cause a reduction in local financial resources. For this part of the reduction, the central government makes up for it through transfer payments, and this has been basically compensated. Therefore, local financial resources can be effectively guaranteed.

We have also analyzed the status of the central and local treasury funds, and I would like to talk a little bit about it. The national treasury balance was 4.94 trillion yuan as of the end of April. The balance of this treasury is the money received from the fiscal year minus the money spent, then we have the remaining balance. Of course, this money also excludes VAT credit refunds to enterprises. The total national treasury balance was 4.94 trillion yuan, an increase of about 440 billion yuan or 9.6% compared with the end of April last year. The balance of local treasury funds was 4.56 trillion yuan, an increase of about 500 billion yuan or 12.2% over the same period last year.

In general, the growth rate of fiscal revenue declined in April, as the fiscal and taxation departments at all levels have stepped up efforts to implement the tax reduction and rebate policies of the CPC Central Committee and the State Council. This is an active act of the proactive fiscal policies to deal with the downward pressure on the economy. By subtracting from fiscal revenue, we aim for more corporate benefits and the multiplication of market vitality. At the same time, the fundamentals sustaining China's steady and long-term economic growth remain unchanged. While the coordination of epidemic prevention and control and economic and social development starts to show its effects, fiscal revenue will also rise steadily.

Next, the MOF will continue to thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council on tax rebates and cuts. We will formulate fiscal policies early on, make good use of various policy tools, and act in advance so as to stabilize the macroeconomic market and keep the economy operating within a reasonable range. Thank you.

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