Full Text: Report on China's central and local budgets (8)

Fourth, rectification efforts were constantly strengthened. The State Council paid close attention to the comments and problems raised in relevant resolutions and auditing reports of the NPC. The State Council called for conscientious acceptance of auditing and oversight, diligent implementation of auditing decisions, and resolute efforts to rectify existing problems. All departments and relevant organizations diligently worked to make rectifications. Most of the problems uncovered through auditing in the implementation of the central budget have been rectified or corrected, and the persons involved have been investigated. The State Council has reported on the status of rectification work to the NPC Standing Committee.

There are also still some problems that urgently need to be addressed in the execution of the central budget of 2006 and in the handling of economic matters and public finance.

One, structural problems in the economy are still serious. Support for weak links in economic and social development such as agriculture, rural areas, farmers, education, and health is still inadequate.

Two, funding needs to be further increased to address problems related to the national economy and the people's wellbeing. For example, the employment situation is still grave, the system of providing basic cost of living allowances for rural residents is still not fully operational, and in some areas it is still difficult and expensive for students to attend school, and residents still face the problem of inadequate and unaffordable medical services.

Three, the cost of economic development is too high. Supporting policies and measures need to be strengthened to further improve the country's capacity for independent innovation and promote change in the pattern of economic growth.

Four, because the current state of local-level public finance is poor in some areas, financial guarantees for local-level public services need to be further enhanced.

Five, because loss and waste of public funds still occur from time to time, the management of revenue and expenditures needs to be standardized, made more scientific and modernized.

We need to increase our sense of urgency and our sense of mission, concentrate on deepening reforms, optimize the structure of expenditures, improve corresponding systems, tighten financial and economic discipline, strengthen oversight and inspection, and constantly improve budgetary management and the level of services.

II. The Draft Central and Local Budgets for 2007

In light of the overall arrangements of the central authorities for our work in 2007 and the new situations we face, our general philosophy for formulating the budgets and deciding on financial tasks for 2007 is to take Deng Xiaoping Theory and the important thought of Three Represents as our guide and conscientiously implement the guiding principles of the Sixteenth National Congress of the Party, the third through sixth plenary sessions of its Sixteenth Central Committee, and the Central Economic Work Conference, completely put into practice the Scientific Outlook on Development, speed up the building of a harmonious socialist society, strengthen regulation, improve measures, continue to follow a prudent fiscal policy, and work hard to promote sound, rapid economic development; put people first, give priority to key areas, adjust and optimize the structure of expenditures, and strive to support social development and solve problems in the people's lives; increase efforts to improve public finance systems and standardize the government fiscal management systems at and below the provincial level and make basic public services of different regions more uniform; boldly explore, dare to make innovations, actively work to deepen reforms and improve fiscal and tax systems and mechanisms in order to better enable everyone to enjoy the fruits of reform and development and the benefits of public finance.

In line with the above philosophy, the major budgetary targets for 2007 are set as follows. Total revenue in the central budget should reach 2.442108 trillion yuan, an increase of 318.877 billion yuan or 15% over the amount for 2006. This figure includes 2.35903 trillion yuan collected by the central government, an increase of 314.053 billion yuan or 15.4% over total 2006 revenue (This exceeds the 42 billion yuan projected by the tax and customs authorities for tax revenue. If this goal is not met, the difference will be made up through the central budget stability and regulation fund.), and 83.078 billion yuan turned over by local governments, up 4.824 billion yuan or 6.2% from the amount of 2006. A total of 42 billion yuan will be placed in the central budget stability and regulation fund. Expenditures in the central budget should total 2.687108 trillion yuan, a rise of 338.882 billion yuan or 14.4%. This figure includes 1.1062 trillion yuan of expenditures for the central government, up 107.044 billion yuan or 10.7% over the total for 2006, and 1.580908 trillion yuan in tax rebates and transfer payments to local governments, up 231.838 billion yuan or 17.2%. Expenditures still exceed revenue in the central budget, leaving a deficit of 245 billion yuan. The outstanding national debt in the central budget should not exceed 3.786553 trillion yuan, an increase of 248.385 billion yuan. Total combined revenue in the draft central and local budgets for 2007 is 4.406485 trillion yuan, 533.423 billion yuan or 13.8% more than that for 2006. Total expenditures in the draft central and local budgets amount to 4.651485 trillion yuan, up 630.169 billion yuan or 15.7%. The revenue growth rate is expected to be higher than the forecast rate for economic growth. This takes into account both the trend of rapid economic and social development and the actual increases in revenue of recent years, as well as various other factors that will lower revenue. Setting the target at this level is a reasonable and sound step. (More)