CHINA DAILY: China's Finance Minister Xie Xuren said the country will extend the resource tax - currently only in force in the Xinjiang Uygur autonomous region - to other areas in the coming five years while stepping up a revision of the country's fiscal and tax system.
"We must accept that China is a developing country with 1.3 billion people and uneven regional and urban-rural development. Therefore the fiscal gap (between revenue and expenditure) will still be prominent in the near future," said Xie in an interview with the Xinhua News Agency and People's Daily on Monday.
He said the country will push reform of the taxation system, especially those changes aimed at reducing the reliance of local governments on the real estate sector.
In July 2010, the National Development and Reform Commission (NDRC), the country's top economic planning agency, announced a plan to extend a pilot resource tax plan - originally introduced in June in the Xinjiang Uygur autonomous region on oil and natural gas - to all 12 of the western provinces and autonomous regions, and it said it will extend it across the entire nation.
The benchmark rate will be set at 5 percent and will vary across commodities, according to the NDRC. The levy will be based on the price instead of volume of commodities produced and will be widened to apply to coal and water.
Xie also vowed to reform individual income tax levied on high-income groups and to promote reform of real estate taxes during the next five years.
In this way the commission hopes to build a "scientific and reasonable" fiscal system to facilitate sustainable growth.
"The reform of the resource tax will definitely benefit the nation's plans for sustainable growth by discouraging the exploitation of resources. It will also help to solve the developmental imbalances in different regions by boosting local fiscal revenues," said Zhou Mingjian, an analyst with Pacific Securities.
China has been widening local tax channels, such as those on vehicles, property, and resources, to increase the fiscal revenue of local governments, which are not allowed to borrow directly from banks or issue bonds to fund deficits and support infrastructure construction.
The nation will also allocate fiscal revenue between central government and local authorities in a more balanced manner, in accordance with the respective administrative responsibilities, said Xie.
The power to decide on local tax categories, rates, and cuts will be given to the provincial-level governments during the next five years, he said in a commentary for Qiushi magazine published in November.
Analysts said that move could help local governments expand their revenue sources and reduce fiscal reliance on the real estate market and local debts, which have accumulated as the authorities expand infrastructure construction and other urbanization-related projects.
"We will empower the provincial authorities to manage tax policies properly, and nurture pillar-tax sources at a local level under the auspices of a unified tax administration," said Xie.
Local governments have been heavily dependent on income from real estate development, land sales and related sources, which contributes to problems such as soaring home prices, analysts said.
Xie also said the ratio of fiscal revenue to GDP is at a very low level compared with other countries, and the government will continue to make efforts to maintain stable fiscal revenue growth, to avoid greater tension between fiscal revenue and expenditure.
In 2010, China's fiscal revenue totaled more than 8.3 trillion yuan ($1.3 trillion), a 21.3 percent increase from a year earlier. At the same time, the government spent more than 8.9 trillion yuan, a rise of 17.4 percent year-on-year.
China's fiscal revenue growth is likely to slow, partly because of planned taxation reforms, and the nation will face more pressure in 2011, said Xie at the national fiscal work conference in late December.
More funds will be spent on education, health and social security to improve public well-being, as well as agricultural and irrigation projects, the minister said.

CHINA DAILY: China expects to maintain the stability of its export-related policy, and it is "highly unlikely" that the country will reduce export rebates for highly polluting and energy-intensive industries "during the first half", said a senior Ministry of Commerce (MOFCOM) official.
The Economic Information newspaper reported on Monday that some Chinese ministries are mulling reducing and canceling export-tax rebates on selected products which are highly polluting and energy-intensive, but a senior official from the MOFCOM, in charge of drafting export-related policies, told China Daily that such a decision will not come any time soon.
"While it is still not clear when the global economy will fully recover, China will try to maintain continuity and stability in its foreign trade policies," said the official, who spoke on condition of anonymity.
"We will not take any sort of measures in the first quarter, or even the first half of the year, if there are no signs of an entrenched recovery in the global economy," he added.
Citing an unnamed source, the Economic Information said new tax-rebate measures will probably cover several categories including rubber, steel and materials for construction, although the rate of any rebate was not disclosed. The newspaper said the ministries have finished preliminary research work, but did not outline when the authorities would launch concrete proposals.
"Deciding on a timetable is fairly complicated, as many factors, such as the trend of China's exports, have to be taken into consideration," the report said.
Last June, China announced it would scrap tax rebates on some 406 categories of exported products, especially in polluting and energy-intensive industries, a move which signalled a shift in the country's economic development pattern in favor of "green" growth.
As part of its 12th Five-Year Plan (2011-2015), the State Council said China will strengthen efforts to become a more environmentally friendly and energy- and resource-saving economy.
But as external demand is still fragile and many uncertainties exist, including the rising costs of labor and raw materials and possible yuan appreciation, "the stability of export and relevant policies is the most important of all", said Long Guoqiang, a senior trade expert at the Development Research Center of the State Council. "There will be more advantages than disadvantages if we can maintain it (policy stability)."
Song Hong, a senior researcher on international trade from the Chinese Academy of Social Sciences, said: "A reduction in tax rebates would restrict production and exports of environmentally-polluting and energy-intensive goods. China must implement change in a steady but stable manner since any small move will have a fairly big impact on the profitability of the industries involved."
China's foreign trade reached a record high of $2.9 trillion in 2010, up 34.7 percent year-on-year, and exports grew by 31.3 percent year-on-year to $1.58 trillion. Experts have predicted that export growth will slow to 15 or 20 percent this year.
Chen Deming, the minister of commerce, also said at the annual commerce conference in December that China's exports will be challenged by the European debt crisis, currency revaluation expectations and the rising price of commodities this year.
"China will try to stabilize exports and strike more balanced trade," said Chen.
China's monthly trade surplus has remained high, at around $20 billion, since the second half of 2010. That has provided some foreign nations, including the United States, with ammunition to pressure China to allow its currency to rise, despite the country's moves to narrow its surplus gradually this year as more measures to promote imports are underway.
Adjustments - whether a rebate increase or reduction - will be implemented if the trade situation changes, said the MOFCOM official.
"If the trade surplus is large enough and stable global economic growth is maintained, China will make the appropriate adjustments to the tax-rebate policies," he said.