The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Advancing Chinese Modernization" (hereinafter referred to as the "Decision"), adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party of China, proposes deepening the reform of the fiscal and tax systems and makes important arrangements for improving the budget system and other matters. Public finance is the foundation and an important pillar of national governance. The new round of fiscal and tax system reform must meet the requirements of advancing the modernization of the national governance system and governance capacity, effectively shore up weaknesses and strengthen areas of weakness, accelerate the improvement of fiscal and tax systems and mechanisms conducive to high-quality development, and foster new momentum and new advantages for development.

Historical experience shows that fiscal and tax system reform has played an important role as a "breakthrough point" and "vanguard" in every major round of reform. In particular, since the Third Plenary Session of the 18th Central Committee of the Communist Party of China, comprehensive deepening of reform has been carried out around the budget management system, the tax system, and intergovernmental fiscal relations, and a series of progress and achievements have been made in establishing and improving a modern fiscal and tax system: budget performance management has been continuously deepened, the replacement of business tax with value-added tax (VAT) and the reform and improvement of VAT have been implemented, and reform of the division of fiscal powers and expenditure responsibilities between the central and local governments has been advanced in depth. These reforms have played an important role in promoting high-quality development and advancing the modernization of the national governance system and governance capacity.

However, it should also be noted that, compared with the requirements of serving and supporting Chinese modernization, China's current fiscal and tax systems still have some prominent problems. In budget management, there is insufficient overall coordination, budget constraints are not strong enough, performance management is not deep enough, and the efficiency of resource allocation and use needs to be improved; a sustainable local tax system has not yet been perfected; the division of powers and expenditure responsibilities between the central and local governments is not clear and reasonable enough; and so on.

At present, the foundation for China's economic recovery and improvement still needs to be consolidated, fiscal operations are in a state of "tight balance," and the implementation of major national strategies and the building of security capacity in key areas have placed higher demands on fiscal support and guarantee capacity. In the next stage, we must firmly grasp the requirements of Chinese modernization for the fiscal and tax systems, target the prominent problems that currently exist, seize the key points, plan and implement the new round of fiscal and tax system reform, and establish and improve a modern fiscal system compatible with Chinese modernization.

Improve the modern budget system and improve the local tax and direct tax systems. Strengthen the overall coordination of fiscal resources and budgets, and incorporate all revenues obtained by relying on administrative power, government credit, and state-owned resources and assets into government budget management. Unify budget allocation authority and improve the uniformity and standardization of budget management. Comprehensively implement budget performance management and improve the efficiency of fund use. Improve the budget disclosure and supervision system. Cultivate local tax sources, expand local fiscal resources, and gradually establish a standardized, stable, and sustainable local tax system. Advance consumption tax reform, steadily move the consumption tax collection stage backward, and continuously improve and perfect tax collection and administration capacity. Study the merger of urban maintenance and construction tax, education surcharges, and local education surcharges into a local surtax, and authorize localities to determine specific applicable tax rates within a certain range. Improve the direct tax system. Improve the individual income tax system that combines comprehensive and classified taxation, and implement unified taxation of labor income.

Deepen the reform of the division of fiscal powers and expenditure responsibilities between the central and local governments and the reform of the fiscal system below the provincial level. Taking into account the matching of fiscal resources, focus on improving the system of shared fiscal powers, appropriately strengthen central fiscal powers, and increase the proportion of central fiscal expenditure. Promote the establishment of guarantee standards for shared fiscal powers below the provincial level, and, taking into account the economic development levels, fiscal conditions, and existing policy provisions of cities and counties, determine differentiated sharing ratios for expenditure responsibilities at the provincial, municipal, and county levels for shared fiscal powers.

Improve the transfer payment system and improve the management mechanism for local government debt. Further increase equalization transfer payments, promote the channeling of fiscal resources downward, and enhance the public service guarantee capacity at the grassroots level. Establish and improve a classified management mechanism for transfer payments, improve the preparation of transfer payment budgets, promote the management of transfer payments for shared fiscal powers as a separate category, strengthen the management of the allocation, use, and performance of transfer payments, and further advance the reform of the transfer payment system below the provincial level. Further standardize the preparation and execution of transfer payment budgets and the use and management of funds. Improve the management system for special-purpose bonds, strengthen penetrating management of projects, strengthen the collection of project revenues, and ensure repayment on time. Coordinate the resolution of local debt risks and stable development, strengthen coordination and cooperation among departments, resolutely curb the increase of hidden debt, orderly resolve existing hidden debt, and gradually reduce the level of debt risk. Improve the full-caliber monitoring and supervision system for local debt, and advance the transformation of local financing platforms by category.