MIIT:Renewal of Purchase Tax Concessions

According to Zhu Hongren on 5th of this month, the spokesman of Ministry of Industry and Information Technology, since the current policies, such as, half purchase tax concessions to vehicle, vehicle and electric appliance subsidy program for rural areas, have played important roles in boosting demand and structure adjustment, the application renewal and its scope of expansion will be under consideration.

During the Autumn Report of China’s Industrial Economic Operation in 2009, Zhu Hongren expressed that the next step will be taken to study and formulate the relevant measures in stimulating consumption and raising people’s income, as well as increasing contribution rate of consumption to economy growth.

Zhu also pointed out 3 policy orientations for driving the future consumption. At first, lower the market admittance threshold for nongovernment investment. As to the competition in the natural or non-natural monopoly industries, it will be taken into consideration for bringing along the competition mechanism, allowing nongovernment investment. In addition, further to improve investment approval, land, loans, and tax support policies in order to pick up the steady growth of nongovernment investment.

Secondly, accelerate the income distribution reform and improve social security system. In the long run, the key to driving consumption demand is to raise people’s income growth rate as well as the share in the national income. Gradually raise the proportion of labor payment during the initial distribution, as well as protect labor’s legitimate rights and interests in the market. Great efforts will be made to push forward the enterprises in establishing the collective wage negotiation system, and improve worker’s negotiation ability, set up the mechanism of wages in steady growth. Fresh steps will be taken to speed up the new round of tax reform with structural tax cut policy, reduce burden between enterprises and residents, and narrow the income gap. We have set up objectives to boost civil investment, improve the social security’s level and coverage. We should establish basic housing security system in order to raise people’s consumption ability.

Thirdly, promote the consumption structure as well as stimulate its growth. It will strengthen and carry out government’s basic public services, increase people’s consumption demand. What’s more, we should relax the restriction on entry to service sector, reduce the cost, while increase the competition and consumption.（SERENA）

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