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SCMP Reporter

OFFICIALS from the Ministry of Finance have called for the introduction of a new public finance system to resolve the Government's chronic financial difficulties.

  China posted a record budget deficit of 23.66 billion yuan (about HK$31.92 billion at the official rate) in 1992, 2.88 billion yuan more than planned.

   Other than in 1985, China has posted deficits every year since 1979.

  During the first half of this year, government revenue increased by 3.5 per cent over the same period last year, but expenditures increased by 12.5 per cent.

  This left a balance of 2.66 billion yuan, much less than what remained at this time last year.

  The Ministry of Finance has set up a group to map out a blueprint to establish a new public finance system to resolve existing problems, according to the China News Service.

  Officials suggested that a clear division should be drawn between central and local taxation, government and enterprise budgets, and capital and current expenditure, so as to lay down a more reasonable public finance framework.

  Secondly, corporate tax rates and accounting systems for state-owned, collectively-owned, foreign and private enterprises should be unified to provide a basis for fair competition, they said.

  Lastly, finance officials called on the Government to strengthen the implementation of public finance policies to prevent tax evasion and other unlawful practices.

  Researchers with the Ministry of Finance warned that the Government's financial difficulties had reached a critical stage at central and local authorities.

  They also said that the difference between tax burdens on coastal and inland regions was widening because coastal regions, where most of the open cities were located, enjoyed more preferential tax policies.



Beijing reshapes finances