MNI Interview: China Corporate Tax Cuts Not Permanent Reform

     BEIJING (MNI) - Cuts to China's corporate income taxes should be seen as a

short-term policy response to a slowing economy and not be seen as a permanent

change of the tax system, a prominent government advisor told MNI in an

interview. 

     Meanwhile, some taxes changes like the value-added tax (VAT) cut may stay

permanent as systemic reform, Gao Peiyong, vice president of the Chinese Academy

of Social Sciences and a tax policy specialist, told MNI on Sunday on the

sideline of the Chinese People's Political Consultative Conference, of which he

is a member. 

     Gao spoke as expectation and pressure are mounting on policymakers to

accelerate fiscal stimulus, in particular steep tax cuts, to arrest the sliding

economy which last year grew at the slowest place in over 20 years at 6.6%. 

     The seasoned advisor was careful to note that short-term policies for

bailing out economy should not be considered as permanent structural reform,

saying that "the policy adjustment is countercyclical in nature, useful only

when the economy slows." 

     Reducing taxes and fees have the twin goals of cutting costs of production

and stabilizing growth, and they should be treated separately, Gao said.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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