Full text: Report on China's central, local budgets(16)

II. DRAFT CENTRAL AND LOCAL BUDGETS FOR 2012

1. Current Fiscal and Economic Situations Facing Chinah Our country's economic development faces a more complex situation in 2012, and there will be a significant imbalance between revenue and expenditure.

Regarding revenue, sustained economic growth will lay a strong foundation for revenue growth. However, many uncertainties exist in the global and domestic economic situations, growth in corporate profits will fall, structural tax reductions will be increased, and a higher individual income tax threshold on salaries and adjustments to the tax rate structure will both have a lingering effect on this year's revenue. We will carry out pilot reforms of replacing business tax with VAT, raise the income threshold on special surcharges on oil sales, and extend and expand the preferential income tax policy for small businesses with low profits. Add to this the higher VAT and business tax thresholds implemented last year, and the result is that revenue will fall this year.

As for expenditure, government spending on education needs to be expanded, and considerable increases in government investment are needed to extend coverage of the new old-age insurance system to all eligible yet uninsured rural and urban residents, to increase basic pensions for enterprise retirees and government subsidies to the new rural cooperative medical care system and the basic medical insurance system for non-working urban residents, and to increase investment in low-income housing projects. All these efforts will put great pressure on expenditure.

2. General Requirements for Compiling Budgets and Doing Public Finance Work

On the basis of the central leadership's decisions and arrangements, while compiling the 2012 budgets and doing public finance work, we will comprehensively implement the guiding principles of the Seventeenth CPC National Congress, the third through sixth plenary sessions of the Seventeenth Central Committee, and the Central Economic Work Conference; take Deng Xiaoping Theory and the important thought of Three Represents as our guide; thoroughly apply the Scientific Outlook on Development; keep in mind the theme of scientific development and the main thread of accelerating the transformation of the pattern of economic development; and adhere to the general principle of making progress while maintaining stability in all aspects of our work. We need to follow a proactive fiscal policy; deepen reform of fiscal and tax systems; improve structural tax cut policies; adjust the distribution of national income; further optimize the structure of government spending; increase support for agriculture, rural areas, farmers, education, medical and health care, social security, employment, culture, low-income housing, energy conservation, environmental protection, and underdeveloped areas; strictly limit regular expenditures; and maintain and improve living standards. We need to adhere to the principles of managing fiscal matters in accordance with the law, taking all factors into consideration when making overall plans, and increasing revenue and reducing expenditure; manage public finances in a more scientific manner; use government funds more efficiently; push forward economic restructuring and balanced regional development; promote steady and robust economic development; keep overall price levels basically stable; and maintain social harmony and stability, so we can greet the coming Eighteenth National Party Congress with outstanding achievements in economic and social development.