July 31, 2014 / 12:25 PM / in 3 years

China's FinMin vows to pursue fiscal reforms

BEIJING, July 31 (Reuters) - China will re-vamp its fiscal system as promised by the government by carrying out changes that include levying property taxes nationwide, Finance Minister Lou Jiwei said on Thursday.

In remarks published on the Finance Ministry’s website, Lou said China would improve its tax collection and fiscal budget systems, and redefine the financial obligations of its central and regional governments.

No further details were provided.

Fiscal reform is a vital part of China’s plans to re-order its financial system in a change that is its most ambitious in three decades.

Critics say China’s present fiscal system, which leaves too many spending obligations with regional governments without giving them an adequate share of fiscal revenues, is the cause of the country’s $3 trillion local government debt problem.

A state audit of public finances last year showed governments owed a total of $3 trillion, as they borrowed from banks and investors to pay for everything from building roads and sewers, to paying off farmers for land taken in land seizures. (Reporting by Koh Gui Qing; Editing by Robert Birsel)

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