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Introduction
Between 1949 and 1978,
China exercised a fiscal and taxation system adapted to a system of
planned economy. Financial policy thus covered every aspect of social
life. But since the introduction of the policies of reform and opening
to the outside world, China¡¯s finance sector has broken away from
the unified distribution of revenues and expenditures system that
complied with a highly-concentrated system of planned economy, and
gradually carried out reforms of the fiscal and taxation system. The
reform is aimed at diversifying financial policy and distributing
mostly by coordinating benefits for the purpose of controlling economic
operations indirectly and guiding resource distribution. Since 1984,
the Central Government first practiced different responsibility methods
for revenue and expenditure in different places, and then shifted
the national budget system from single entry to double entry. In 1992,
in order to meet the needs of micro-control, the financial system
started to be greatly reformed. By 1994, a structure of financial
system meeting the needs of the socialist market economy, with tax
distribution as the core, has been primarily formed. Its major contents
are: (1) on the basis of the taxation system, to establish a multi-level
financial system that rationally divides central taxes, local taxes
and taxes shared by the central and local governments; (2) in the
aspect of taxation policy, to set up a new system of turnover tax
with added value as the mainstay, and consumption and business taxes
as supplements, and at the same time to establish and perfect the
income tax system; (3) to practice a double-entry budget system consisting
of regular and constructive budgets; (4) to promote the balance of
total economic output and the economic structure by means of comprehensively
utilizing the budget, taxation, the state debt and allowances. |
