Page 10 - REPORT ON THE WORK OF THE GOVERNMENT

refraining from adopting a deluge of strong stimulus policies that would eat into
our potential for future growth.

We worked relentlessly to ensure stability on six fronts and security in six

areas, with a particular emphasis on the latter. We pursued reform and opening
up as a means to steer the economy through various trials and difficulties and
sustain growth.

We pursued a proactive fiscal policy.
The deficit was kept at a reasonable level. Over these five years, the
deficit-to-GDP ratio and the government debt ratio were respectively kept within 3
percent and around 50 percent. We continued to improve the structure of

government spending and ensured sufficient funding for key areas such as
education, science and technology, environmental protection, and efforts to meet
people’s basic living needs.
We implemented a policy of large-scale tax and fee cuts with both institutional
arrangements and time-limited measures. Tax and fee reductions were intensified

following the outbreak of Covid-19, and they became a pivotal part of our response
to the epidemic. We completed the task of replacing business tax with value-added
tax and abolished the former. The rate of VAT was lowered from 17 percent to 13

percent in many sectors where VAT accounts for the largest share of tax receipts.
The VAT threshold was raised from 30,000 yuan to 150,000 yuan of monthly sales
for small-scale taxpayers in a phased way, and the minimum corporate income tax
rate was cut from 10 percent to 2.5 percent in real terms for micro and small
businesses.

Tax and fee cuts are equitable, inclusive, effective, and directly accessible for
those in need. Over the past five years, tax cuts and fee reductions respectively
totaled 5.4 trillion yuan and 2.8 trillion yuan. This policy not only helped
enterprises overcome difficulties and stay afloat, but also nurtured business

growth and cultivated sources of tax revenue.
On average, over 11 million market entities including enterprises and
self-employed individuals were newly registered with the tax authorities each year,
and the central government met all of its annual targets for budgetary revenue.

With VAT credit refunds taken into account, national fiscal revenue almost

 The six fronts refer to employment, the financial sector, foreign trade, foreign investment, domestic
investment, and expectations. The six areas refer to job security, basic living needs, operations of market
entities, food and energy security, stable industrial and supply chains, and the normal functioning of
primary-level governments.
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