In the 2017 government work report, Premier Li Keqiang promised to cut taxes and fees collected from corporates by 350 billion yuan (50.7 billion US dollars) and 200 billion yuan (28.9 billion US dollars) respectively. CGTN spoke to Alan Lan, tax partner at Ernst & Young to get his reaction to the news.

The total tax revenue in 2016 was 11.7 trillion yuan (1.7 trillion US dollars), while tax cut was 570 billion yuan (82.6 billion US dollars). So government’s latest announcement of a corporate tax cut, in Lan’s view, may not be enough to boost investment. 

“It does help the development of real economy, but it is not enough to spur the investment,” Lan said.

He considers investment, export and consumption as three engines to drive China’s economic growth. Instead of stimulating the investment, Lan said the tax cut might mean more for consumption. 

The accountant also believes last year’s tax revenue had an influence on the cut from value-added-tax (VAT) reforms, even though the combined business tax and VAT revenues were higher in 2016. 

“Actually, the tax cut started on May 1 last year. The business tax plus VAT from May to December decreased. However, the business tax plus VAT from January to May increased. From May to December and From January to May, we have different billing. Obviously, we have seen tax revenues decreased in the last seven months,” Lan explained. 

As to the 2017 budget, China's general budget revenue this year is expected to reach 17 trillion yuan, up 5 percent from 2016. China's public debt issued by local governments stood at 15 trillion yuan by the end of 2016. Meanwhile, the finance ministry set a debt cap of about 19 trillion yuan. 

Lan thinks the local government debt still stood in the international safety range. “Maybe there are certain cities or provinces above the range, but the central government, the ministry of finance, is taking measures to put stringent administration measures on the debt insurance. Overall, it’s safe.”