The Ministry of Finance answered hot topics such as the income situation, special bonds, and tax incentives in the second half of the year, and announced the new energy revenue and expenditure situation in the first half of the year

On July 19th, the Ministry of Finance held a press conference on the financial revenue and expenditure situation in the first half of 2023, introducing the financial revenue and expenditure situation in the first half of the year and answering five hot topics, including the operation of financial revenue and expenditure in the first half of the year, the issuance and use of local government special bonds, the implementation of tax and fee preferential policies, central financial support for local grassroots "three guarantees", and the continuation and optimization of new energy vehicle purchase tax reduction policies.

The overall recovery and improvement of China's economic operation will provide important support for the growth of fiscal revenue

Xue Xiqian, Deputy Director of the Treasury Payment Center of the Ministry of Finance, stated that in the first half of the year, the national general public budget revenue was 11920.3 billion yuan, a year-on-year increase of 13.3%. The growth rate of fiscal revenue is relatively high. In addition to the economic recovery driven growth, it is mainly due to the implementation of a large-scale value-added tax retention and refund policy in April last year, with a large number of centralized tax refunds, which has lowered the base. This year, relevant tax refunds have returned to normal, with a year-on-year decrease of 1523.6 billion yuan in refunds in the first half of the year. Affected by this, tax revenue, especially domestic value-added tax, has significantly increased, correspondingly driving up the growth rate of fiscal revenue.

From the perspective of tax revenue, in the first half of the year, the national tax revenue was 9966.1 billion yuan, a year-on-year increase of 16.5%. Among them, the domestic value-added tax increased by 96%, mainly due to the high number of tax refunds and low base in the same period last year. The domestic consumption tax decreased by 13.4%, while the value-added tax and consumption tax on imported goods decreased by 9.5%. This was mainly due to the fact that some of the income was received in the first quarter of last year, raising the base. In the first quarter of this year, the domestic consumption tax, value-added tax and consumption tax on imported goods decreased by 22.2% and 14.4% respectively. In the second quarter, the domestic consumption tax turned positive, and the decline in value-added tax and consumption tax on imported goods also significantly narrowed. The corporate income tax has decreased by 5.4%, mainly due to factors such as a decrease in corporate profits. Personal income tax decreased by 0.6%, mainly due to the continuous release of the effect of the special additional deduction policy. The comprehensive income settlement and payment refund of personal income tax was refunded more than the same period last year, which lowered the growth rate. In real estate related taxes, deed tax increased by 5.1% and property tax increased by 3.9%; Urban land use tax decreased by 4.9%, land value-added tax decreased by 18.2%, and farmland occupation tax decreased by 20.4%.

From the perspective of non tax revenue, in the first half of the year, the national non tax revenue was 1954.2 billion yuan, a year-on-year decrease of 0.6%. Among them, the revenue from paid use of state-owned resources increased by 10.7%, mainly due to the activation of idle assets through local channels; The revenue from administrative fees nationwide decreased by 12.5%, while the revenue from fines and confiscations decreased by 16.2%.

From the perspective of local revenue, in the first half of the year, local general public budget revenue was 6531.9 billion yuan, a year-on-year increase of 13.5%. Looking at different regions, the income of the eastern, central, western, and northeastern regions increased by 12.8%, 10.7%, 17.5%, and 17.5% year-on-year, respectively. The income of 31 provinces has achieved positive growth year-on-year, with 10 provinces increasing by over 20%, 15 provinces increasing by between 10% and 20%, and 6 provinces experiencing single digit growth.

From the later income trend, the overall recovery of China's economy will provide important support for the growth of fiscal revenue. But with the gradual recovery of the normal situation of retained tax refunds in the second half of last year, the incomparable factor of the year-on-year decrease in retained tax refunds in the second half of this year will gradually fade away, and the monthly fiscal revenue growth rate will correspondingly decline, which is in line with the growth of economic tax sources.

In terms of fiscal expenditure, financial departments at all levels have strengthened the coordination of fiscal resources, maintained necessary expenditure intensity, and continuously increased investment in weak links and key areas of economic and social development. Key expenditures such as basic livelihood, rural revitalization, regional major strategies, education, and scientific and technological breakthroughs have been effectively guaranteed. In the first half of the year, the national general public budget expenditure was 13389.3 billion yuan, a year-on-year increase of 3.9%. Among them, social security and employment expenditure increased by 7.9%; Education expenditure increased by 5%; Health expenditure increased by 6.9%; Agriculture, forestry, and water expenditure increased by 3.7%; Science and technology expenditure increased by 2.5%; Housing security expenditure increased by 8.5%.

Special bonds issued by various regions for project construction in the first half of the year amounted to 2172.1 billion yuan

Li Dawei, Deputy Director of the Budget Department, stated that special bonds are an important means for local governments to drive and expand effective investment. They are used for the construction of profitable public welfare projects and require a balance between project returns and financing. The Ministry of Finance conscientiously implements the decisions and deployments of the Party Central Committee and the State Council, strengthens the management of the issuance, disbursement, and use of special bonds, and effectively plays the positive role of special bonds in driving investment. In the first half of this year, the issuance and use of new special bonds mainly showed the following characteristics:

One is to issue the quota early. Last October, a total of 2.19 trillion yuan was allocated in advance for the addition of special bonds for 2023, and after the budget was approved by the People's Congress, 1.51 trillion yuan was allocated. In the first half of the year, various regions issued 2172.1 billion yuan of special bonds for project construction, supporting the implementation of a large number of projects that benefit people's livelihoods, fill gaps, and strengthen weak areas.

The second is to support major projects. Guide various regions to reserve special bond projects, and support nearly 20000 special bond projects in the first half of the year, with priority given to supporting the construction of national major strategies and projects. Among them, 727.5 billion yuan was used for municipal construction and industrial park infrastructure, 421.1 billion yuan for transportation infrastructure, 358.8 billion yuan for social undertakings, and 326.7 billion yuan for affordable housing projects, which played an important role in driving the expansion of effective investment and maintaining stable economic operation.

The third is that the driving effect is obvious. In the first half of the year, approximately 200 billion yuan was used as project capital in various regions, mainly concentrated in the field of transportation infrastructure. Nearly half of it was used for major national strategic projects, effectively leveraging the leverage of government investment.

The fourth is to prevent debt repayment risks. Emphasizing that special bonds must be used for the construction of profitable public welfare projects, the project supervisory department and project units are required to analyze the balance of project financing income in detail. Financial departments at all levels also regard the balance of financing income as a key point of review. Those who do not meet the conditions are not allowed to be included in the special bond project database, nor are they allowed to apply for special bond funds to effectively prevent the risk of special bond debt repayment.

Next, the Ministry of Finance will continue to issue notifications and warnings on the progress of special bond expenditures in various regions, guide them to accelerate the pace of special bond issuance and use, actively play the positive role of special bonds in driving effective investment, stabilize investment, drive stable employment and growth, and better leverage the effectiveness of special bonds.

Actively planning targeted and pragmatic tax and fee preferential policies

Speaking of the implementation of tax and fee preferential policies introduced since the beginning of this year, Wei Yan, Deputy Director of the Tax Administration Department, stated that since the beginning of this year, the Ministry of Finance has conscientiously implemented the deployment of the Central Economic Work Conference, and in accordance with the requirements of "the continuation and optimization that should be continued", worked together with relevant departments to promote the improvement of tax and fee preferential policies, enhance policy accuracy and targeting, focus on alleviating enterprise difficulties, and improve policy efficiency. The specific measures include: firstly, to incentivize enterprises to increase R&D investment and better support technological innovation, the policy of increasing the pre tax deduction ratio of R&D expenses for eligible industry enterprises from 75% to 100% will be implemented as a long-term institutional arrangement. The second is to support the development of small and micro enterprises and individual businesses, optimize and improve the income tax preferential policies for small and micro enterprises and individual businesses, reduce the value-added tax collection rate for small-scale taxpayers to 1%, exempt small-scale taxpayers with monthly sales of 100000 yuan or less from value-added tax, and implement a 5% and 10% value-added tax additional deduction for taxpayers in the production and living service industries, respectively. Thirdly, in order to support employment and people's livelihoods, we will continue to implement policies such as reducing unemployment and work-related injury insurance rates, preferential policies for employment security benefits for people with disabilities, preferential policies for urban land use tax on land used for bulk commodity storage facilities in logistics enterprises, and zero tariff policies on coal imports.

At the same time, in order to support the development of the new energy vehicle industry and promote automobile consumption, the Ministry of Finance, together with relevant departments, has continued and optimized the policy of reducing and exempting the purchase tax on new energy vehicles. To assist in the recovery and recovery of consumption, policies such as phased exemption from the national special fund for the development of the film industry have also been introduced.

Since the introduction of the above policies, the Ministry of Finance, together with relevant departments, has conscientiously organized and implemented various tax and fee preferential policies, promoting their full implementation. The policy effects have gradually become apparent, and the market response has been good. Next, based on the implementation of multiple policies that have been introduced this year, the Ministry of Finance will strengthen policy reserves in response to changes in the situation, actively plan targeted and pragmatic tax and fee preferential policies, focus on relieving difficulties for business entities, continuously enhance development momentum, optimize economic structure, and promote sustained economic recovery and improvement.

This year, the central government's transfer payments to local governments exceeded 10 trillion yuan

In terms of supporting local governments to ensure the "three guarantees" at the grassroots level, Li Dawei, Deputy Director of the Budget Department of the Ministry of Finance, stated that the central finance has always attached great importance to the operational status of local governments, especially grassroots finance. Multiple measures have been taken simultaneously, with linkage between the upper and lower levels, to support the smooth operation of finance and establish a solid bottom line for ensuring the "three guarantees".

One is to increase the intensity of transfer payments. In 2023, the central government arranged a transfer payment of 10.06 trillion yuan to local governments, with a growth of 7.9% after excluding special transfer payments to support grassroots implementation of tax reduction and fee reduction, as well as key livelihood issues. Among them, balanced transfer payments amounted to 2364.9 billion yuan, an increase of 10.3%, and county-level basic financial security mechanism incentive funds amounted to 410.7 billion yuan, an increase of 8.7%, continuously increasing financial support to local governments. As of the end of June, the central government has issued 91.1% of transfer payments to local governments, and those that meet the conditions have been issued, providing strong financial support for local governments to do a good job in grassroots "three guarantees".

The second is to implement a hierarchical responsibility system. According to the principle of "county-level as the main focus, municipal level assistance, provincial-level support, and central incentives", we urge local governments to effectively implement their guarantee responsibilities, strengthen financial discipline constraints, strictly control fiscal expenditures, and seriously investigate and deal with various illegal and irregular issues in the "three guarantees" field, promoting bottom line compliance through strong management.

The third is to strengthen the monitoring of local financial operations. Pay special attention to areas with weak financial resources and high risks, promptly identify and properly handle risks and hidden dangers in financial operations, and ensure that the "three guarantees" of areas with weak financial resources are not problematic.

Next, the central finance will continue to give prominence to the "three guarantees" work, strengthen the guarantee responsibilities of local financial departments at all levels, guide local governments to lower their financial resources to the grassroots level, and work together to do a good job in the "three guarantees" work at the grassroots level.

The policy of reducing and exempting the purchase tax on new energy vehicles has been extended for 4 years

Wei Yan, Deputy Director of the Taxation Department of the Ministry of Finance, stated that in order to support the development of the new energy vehicle industry and promote automobile consumption, with the approval of the State Council, the Ministry of Finance, together with the State Administration of Taxation and the Ministry of Industry and Information Technology, has issued a public notice on the continuation and optimization of the policy of reducing and exempting purchase tax on new energy vehicles, which mainly includes the following four aspects:

One is to clarify the extension of the new energy vehicle purchase tax reduction policy by 4 years, which is extended until December 31, 2027. Among them, new energy vehicles purchased between January 1, 2024 and December 31, 2025 are exempt from vehicle purchase tax, with a tax exemption of no more than 30000 yuan per vehicle; Half of the vehicle purchase tax will be levied on new energy vehicles purchased between January 1, 2026 and December 31, 2027, with a tax reduction of no more than 15000 yuan per vehicle. In addition, the Ministry of Industry and Information Technology will optimize the technical requirements for enjoying vehicle purchase tax reduction policies based on the progress of new energy vehicle technology, development of standard systems, and changes in vehicle models.

The second is to clarify the taxable price for the purchase tax of new energy vehicles under the "battery swapping mode". If the sales revenue of power batteries and new energy vehicles without power batteries are separately accounted for and invoices are issued, the vehicle purchase tax calculation price shall be based on the sales price of new energy vehicles without power batteries purchased.

Thirdly, the Ministry of Industry and Information Technology and the State Administration of Taxation have issued the Catalogue of New Energy Vehicle Models Subject to Vehicle Purchase Tax Reduction and Exemption, implementing management on new energy vehicle models that enjoy vehicle purchase tax reduction and exemption.

The fourth is to impose corresponding penalties on those who provide false information and materials to fraudulently enjoy the reduction or exemption of vehicle purchase tax.

Next, the Ministry of Finance will take the following measures to ensure the implementation of preferential policies for the purchase tax of new energy vehicles. One is to closely cooperate with relevant departments, do a good job in policy transformation, and ensure a smooth transition. The second is to closely monitor the implementation of policies and promptly study and solve prominent issues reflected in policy implementation. The third is to strengthen inter departmental cooperation and data sharing mechanisms, ensure the detailed implementation of vehicle purchase tax reduction and exemption policies, effectively leverage policy effects, and better serve the high-quality development of the new energy vehicle industry.