BEIJING - More tax reforms are on the 2012 agenda as part of China's "positive fiscal policies" intended to restructure and balance the economy, the annual top planning conference said.

The 2011 Central Economic Work Conference agreed on Wednesday to highlight the role of fiscal tools, including "structural tax cuts", in the country's policy guidelines for the next year amid global and domestic uncertainties.

The conference called for stronger management of expenditure and local government debt and strengthening of county-level financial resources.

An important part of the plan involves five tax reforms: a pilot program for the value-added tax; one to the property tax; adjusting the scope and structure of the consumption tax; expanding resource tax reform and studying the feasibility of an environmental tax.

Tax reform got greater emphasis this year compared with the 2010 conference, which called for reforms in personal tax, value-added tax and resource tax.

China raised the threshold for its personal income tax from 2,000 yuan ($314) a month to 3,500 yuan, excluding 60 million taxpayers from the system.

It also shifted the basis of the oil and natural gas tax to value nationwide from volume, which raised the tax rate by about 10 times.

"There will be more resources, such as coal, to be taxed by value of production because easing inflation gives more room for tax reform," Liu Shangxi, deputy director of the finance ministry's Research Institute for Fiscal Science, told China Daily.

Liu said it hasn't been decided whether the property tax pilot program in Shanghai and Chongqing would be extended to more areas or nationwide, but the tax would continue to serve as a means of regulating the housing market rather than a new source of fiscal revenue.

"As for the consumption tax, the key of the reform lies in changing the scope of assessment. For example, to redefine 'luxury goods' by moving some cosmetics products off the list," Liu said.

Environmental taxes, such as a carbon tax, are still in the research phase and will not necessarily be implemented in the next year, but such taxes will eventually replace some administrative fees, Liu said.

Value-added tax reform, or replacing the turnover tax with a value-added tax, will see its first pilot program in Shanghai starting on Jan 1.

Liu said that this move would resolve the issue of duplicate taxes and lower the tax burden, especially for the service sector.

"All these tax cut measures are targeted fiscal tools, and they replace the large-scale government spending that has brought many disastrous consequences to the county's economy," Liu said.

Meng Chun, a senior researcher with the State Council's Development and Research Center, said in a research note that more such tax preferences should be directed toward smaller businesses to help them move up the value chain and withstand the global downturn.

Tax burdens on the agricultural and processing sectors should be eased to stabilize food prices and ease inflationary pressure, Meng said.

Fiscal revenue reached 9.73 trillion yuan by the end of November, up 26.8 percent year-on-year. But the growth rate fell to 10.6 percent from about 17 percent in the previous two months.

China Daily