7. We will actively help in the reform to combine the two laws on corporate income tax to further improve the socialist market economy. We need to make more effective use of the role of fiscal and tax systems in regulating the national economy, in promoting economic restructuring and in ensuring sustainable development.

First, we will actively work on legislation to combine the two laws on corporate income tax, one for domestic enterprises and one for overseas-funded enterprises. We will be working out regulations for implementing the Law on Corporate Income Tax and formulating corresponding support policies and measures to ensure smooth progress in implementing the law, promote fair competition among enterprises, allow Chinese enterprises to grow bigger and stronger, expand domestic demand and promote sustainable economic development.

Second, we will make steady progress in the reform of other taxes. We will lose no time in working out a specific plan and support measures for fully implementing the VAT reform. We will be introducing and implementing a new tax system for resources. We will strive to complete formulation and begin implementation of a new tax for the use of farmland for nonagricultural purposes. We will work out an implementation plan for levying tax on property. We will soon improve the plan for reforming the fuel tax and begin implementation when conditions are right. We will work out revisions to the stamp tax. We will constantly work to improve policies and measures related to the regulation of tax on real estate.

Third, we will strongly support deepening of the reform of SOEs and the financial system. We will continue supporting the policy-mandated closing and bankruptcy of SOEs, make proper arrangements for the employees of these closed and bankrupt enterprises, and promote economic restructuring. We will accelerate the trial reform of collectively owned factories operated by SOEs in northeast China. We will support the development of small and medium-sized enterprises. We will energetically pursue reform of policy banks, the Agricultural Bank of China and the China Export & Credit Insurance Corporation and prepare financial asset management companies to compete in the market.

Fourth, we will launch a trial budget system for the management of state capital. Compiling a budget for the management of state capital will help to strengthen the government's ability to exercise macroeconomic regulation, reduce structural obstacles hindering the development of SOEs, promote strategic adjustment in the distribution and structure of the state sector of the economy, pay necessary reform costs and standardize the distribution relationship between the state and SOEs. Some enterprises directly managed by the central government and tobacco enterprises will be selected to participate in a trial compilation of budgets. Local governments should also actively work to launch such trials and ensure that they produce the anticipated results.

8. We will increase transfer payments to improve the ability of local governments to provide basic public services. Continuing to carry out fiscal and tax policies designed to promote the large-scale development of the western region, revitalize old industrial bases such as northeast China and promote the revival of the central region, supporting the role of the eastern region in leading development, and constantly increasing fiscal support will not only improve the ability of the government to provide public services but also speed up economic restructuring.

First, we will increase regular transfer payments. Regular transfer payments from the central budget to local governments in 2007, mainly going to the central and western regions, will reach 192.4 billion yuan, and regular transfer payments to ethnic minority areas will reach 21 billion yuan, an increase of 39.7 billion yuan and 5.4 billion yuan, respectively, over the figures for 2006.

Second, we will both develop and expand on the results of efforts to ease the financial problems of counties and townships. A total of 33.5 billion yuan is allocated in the central budget for 2007 in incentive and subsidy funds, an increase of 10 billion yuan over the figure for 2006. We will improve the policy of "three rewards and one subsidy," as well as inspect and evaluate the work of all local governments to ensure that policies are being implemented and that funds are being used properly. We will be working hard to improve the financial management system at the provincial level and below and carrying out the reform to put county public finance directly under the management of provincial governments and township public finance under the management of county governments. Third, we will diligently implement the policy of guaranteeing operating expenses of the judicial system. A total of 6.49 billion yuan, an increase of 560 million yuan over the amount for 2006, has been allocated in the central budget in assistance for public security and procuratorial organs and people's courts in financially strapped areas. These organs and courts will improve their management structure and set up a reward mechanism. After reforming the methods for handling expenses for lawsuits we will promptly study the problem of how to ensure adequate operating expenses for courts. Local governments should also ensure that operating expenses for the judicial system are met and should incorporate guarantees for all expenses required for the functioning of the local judicial system into their budgets as soon as possible. A total of 59.483 billion yuan is allocated in the central budget for public safety in 2007, an increase of 13.125 billion yuan or 28.3% more than the 2006 allocation. (More)