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--Can't Pursue Tax Cuts, Increased Spending, At Same Time: Liu Shangxi
BEIJING (MNI) - China is expected to unveil a package of tax cuts next
year, larger in scale than the CNY1.3 trillion seen in 2018, to boost the
economy, a top policy advisor at the Ministry of Finance told MNI in an
exclusive interview on Tuesday.
At the same time, fiscal spending will be limited as the tax reductions are
implemented, Liu Shangxi, the director of the Research Institute for Fiscal
Science under the Ministry of Finance, said in Beijing before a ceremony
commemorating the 40th anniversary of China's reform and opening up policy.
The tax cuts will be "at least bigger than this year's," Liu said. However,
he was quick to note it wouldn't be possible to boost spending and cut taxes at
the same time, saying "You cannot do two at the same time".
Liu spoke after state media reported a meeting of the politburo of the
ruling Communist Party of China held last week, which called for increased
market confidence, helping boost domestic consumption, and reduction of of
burdens on business.
While commentators agree more stimulus is needed, some have argued for more
fiscal-led investments, such as public infrastructure projects. Liu's view
reflected opinions that such measures are less likely, and that the government
may still be conservative with the overall budget deficit.
"Promoting the formation of a strong domestic market" is an absolute option
given the uncertain external demand, Ming Ming, chief analyst at CITIC
Securities, wrote in a commentary.
"Reducing fees, cutting taxes, and letting the deficit increase are all
possible policy options," Ming said.
The government isn't expected to finalize its policies until early next
year, according to Liu. However, the message from the politburo's meeting
indicated that policymakers' optimism on the economy hasn't picked up, so the
current combination of policies is likely to continue, said Ming.
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