IMF says China’s complex fiscal system needs ‘crucial’ overhaul

imf

Beijing:China’s sprawling local government financing system needs “crucial” reforms to increase consumption, build prosperity and encourage economic rebalancing, the International Monetary Fund said.

Among the IMF’s recommendations is to fund local governments by imposing recurring property taxes and adding local surcharges to national individual income taxes. China’s fiscal system is the world’s most decentralized, with local bodies responsible for 85% of government spending, the fund said in a report, citing the breadth across 31 provincial level governments, 334 prefectures, 2,850 counties, 40,000 townships and 900,000 informal village jurisdictions. Including off-budget spending by local government financing vehicles brings the ratio up to 89 percent of all public expenditures…

Read more : Livemint, 16.04.2018