China to deepen tax reforms: financial minister

Tax systems concerning business turnover, consumption, resources and property will continue to be reformed in order to promote economic development, China's Financial Minister Lou Jiwei said Wednesday.

The country will widen its pilot scheme of replacing turnover tax with value-added tax (VAT) to sectors including railway transportation, postal services and telecommunications, Lou said at the on-going bimonthly session of the National People's Congress (NPC) Standing Committee, which started Monday and ends Friday.

Starting from Aug. 1, VAT reforms will expand nationwide from the current 12 provinces and municipalities to further reduce tax burdens on businesses, especially small and micro enterprises.

VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production, while turnover tax refers to a levy on a business's gross revenues.

China will also impose its consumption tax to goods that could cause severe environmental pollution and over exploitation of resources. The tax will also be applicable to more luxury goods, Lou said.

The resource tax will be extended to coal based on prices instead of sales volume. The current tax covers crude oil and natural gas.

The government is also mulling to expand property tax trials currently in place in Shanghai and Chongqing municipalities, Lou said, without giving details.

The trial imposition of the tax is part of China's efforts to cool its property market in response to public concerns over runaway housing prices.