As part of the China budget 2011, authorities will be looking to collect 2.3 trillion Yuan through VAT, which means an increase of 11 percent from 2010 fiscal. It is estimated that the contributions made by property and resource taxes will increase by 11 percent and 22 percent respectively in the same period.
Highlights of China Budget 2011:
The central government will spend 9.79 trillion Yuan in 2011 fiscal, which is an addition of 1.3 trillion Yuan on the sum earmarked in the 2010 China budget.
As per central government estimates, yearly earnings for 2011 will amount to 8.89 trillion Yuan, a deficit of 900 billion Yuan.
In 2011 urban and rural residents in China will be paid healthcare subsidies amounting to 200 Yuan on a per capita basis. In 2010 fiscal this amount was 120 Yuan.
This implies that in areas like Inner Mongolia the upper limit for local residents medical expenditure system has been readjusted to 30,000 Yuan from 20,000 Yuan in 2010.
There will be increased expenditure in areas of education, social security, health insurance across rural and urban sectors, policy based housing, healthcare and water protection facilities.
A major chunk of governmental expenses will be directed towards education in 2011. By 2012 4 percent of China s GDP will be spent on education sector. Services like recruitment of security official and school buses will be given special attention.
China will spend 80 percent more in the healthcare section in 2011. The local governments will be provided 14 billion Yuan by the national government.
Subsidy on public health services like prevention of diseases and vaccinations will be raised on a per capita basis. The new rate will be taken up to 25 Yuan from 15 Yuan.
This means approximately 32.5 billion Yuan will be invested, which represents a yearly increase of 13 billion Yuan.
In 2011 China s healthcare expenses will amount to approximately 400 billion Yuan.
Retirees in China will see an increase of 140 Yuan in their basic pension on a per capita basis.
Basic insurance for senior citizens will cover 40 percent counties in 2011, an increase of 300 percent from the previous year.
The basic subsidy provided to rural and urban residents in China to cover their costs of living will be increased in 2011 as well.
Ten million policy based houses will be constructed in 2011 by the National Development and Rural Commission.
A fourth of governmental expense in 2011 will be directed towards rural development and agricultural projects such as water conservation plans.
There will be reductions in areas such as international tours, cars for officers and business receptions.
In 2011 there will be a 70 percent increase in the central government revenue that is transferred to the local governments.
China aims to achieve a growth rate of 8 percent with regards to its revenues.
In 2011 tax payers belonging to the mid level or lower income categories will be required to pay lesser personal income taxes.
Business tax will be substituted by the value added tax.
Local governments in China will receive 3.4 trillion Yuan from the central administration.
According to the Ministry of Finance, additional revenue will be paid to the central or local governments only in case of legal projects the money will not be provided for projects that have already started. In general, the additional funds will be directed towards the 2012 budget.
China has added to its defense budget in 2011 fiscal by 12.7 percent. 1 billion Yuan will be spent as opposed to 532.1 billion Yuan in 2010 fiscal. Several analysts have said that China spends more than its projected budget in case of defense.
China is looking to limit its budget deficit to 900 billion Yuan, which is 2 percent of its GDP in 2011. The Finance Ministry has said that it will look to curb expenses and increase its efforts to boost social spending. In 2010 China had a budget deficit of 1 trillion Yuan, which amounted to 2.5 percent of its GDP.
As per the 2011 budget the central and provincial governments will look to achieve a growth rate of 8 percent in their revenues. It will also look to add 11.9 percent to its expenses for 2010 fiscal. Both the rates will be lower than 2010 when the economy grew at 21.3 percent and expenses increased by 17.4 percent.
China Budget 2011- Expert Opinion:
The rate at which China�s fiscal expenses are going up in 2011 is greater than the rate of its growth. Experts therefore feel that the policymakers need to make the budget a tighter affair.
Several tax cuts are expected to hinder China�s economic growth rate. A major economic problem for the East Asian country is dissemination of adequate financial resources to the lower tiers of governance.