BEIJING: China state cabinet said that government has decided more tax breaks to small companies to boost economic growth as it would extend existing tax breaks to small businesses until the end of 2017.
To counter downward pressure on growth, the government must make its proactive fiscal policy more effective, the State Council said in a statement released after its first meeting since the Lunar New Year holiday.
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China’s small firms have been struggling as the country’s economic growth slows. The cabinet, which had previously unveiled a series of measures to ease companies’ financial burdens, said it would also reduce the rates that employers and employees have to pay into the country’s unemployment insurance.
The government will also accelerate the approval and construction of large water projects, the cabinet said, adding that approvals of new projects will need to be completed by the end of July, while government funds for existing projects must be fully in place by end-May.
Economists have called for China’s government to ease monetary and fiscal policies to bolster economic growth, which slowed to 7.4 per cent last year.
Such policies require a higher fiscal deficit, said Mizuho economists in a note to clients Wednesday. They said they expect China’s fiscal deficit ratio to rise beyond 2.5 per cent in 2015, higher than a budgeted 2.1 per cent deficit for 2014.
