MNI POLICY: China Tax Cuts To Benefit Manufacturers: Cheng

     BEIJING (MNI) - The manufacturing sector and smaller businesses will be the

main beneficiaries of the economic boost from China's CNY1.4 trillion tax cuts,

China's vice ministers of finance Cheng Lihua told a briefing Wednesday in

response to questions from MNI.

     Here are the main points of the briefing:

     -The main priority for a proactive fiscal policy is conducting large scale

taxes and fee cut for the year, Cheng said, noting among the announced CNY2

trillion in lower taxes and fees, about 70% would come from tax cuts.

     -At present, major tax cut plans have already been announced and the

authorities will make efforts to get them up and running, Cheng said. The

biggest beneficiary of the VAT cut will be manufacturers, as the sector is the

bedrock of the economy and is struggling somewhat, the vice minister argued.

     -Cheng admitted challenges remain balancing fiscal revenue and expenditure

due to the tax cut, but the ministry will increase revue via expanding income

sources and reduce general government. The larger scale of the local government

special bond quota, which will rise by CNY800 billion 2018's level, will help

boost spending.

     -China will continue to push VAT reform, merging the current three bracket

into two, simplify the tax system and enhance the fairness of tax payment --

although it would be a gradual process, Wang Jianfan, director of the department

of taxation under the Ministry of Finance, told reporters.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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