Proactive Fiscal Policy Is Costly But Worth Paying.

In the face of the better performance of the national economy in the first quarter, an important judgement can be made now: in the current major campaign aimed at ensuring growth, a series of macro-control measures adopted by the government have begun to show effectiveness.

China's fiscal revenue and expenditure in the same period supported this judgement.

On the one hand, fiscal revenue dropped by 8.3% compared with the same period last year. On the other hand, the fiscal expenditure rose year after year. The negative growth of 34.8%. revenue and the trend of fiscal expenditure also occurred simultaneously. This unusual economic phenomenon tells us that the positive fiscal policy aimed at ensuring growth has been gradually implemented and is showing its effectiveness.

Since October last year, the government has issued a series of expansive fiscal revenue and expenditure arrangements around the main line of maintaining stable and fast economic growth.

If the focus of the last positive fiscal policy is mainly on a clue to expand fiscal expenditure, then the active fiscal policy of this time is the simultaneous action of the two wings of fiscal expenditure and fiscal revenue.

Among them, there are not only the traditional measures to expand fiscal expenditure, but also the new action of structural tax reduction.

As far as expanding fiscal expenditure is concerned, there are not only projects to increase government public investment, but also an increase in the income of middle and low income groups, as well as arrangements for the implementation of home appliances to the countryside and the countryside to the countryside.

As far as structural tax reduction is concerned, it involves not only the reduction of the larger tax categories, such as the pformation of value-added tax, the merger of the two enterprise income tax laws, but also the reduction of the relatively small share of taxes, including personal income tax, second-hand housing paction tax and stamp duty on stock pactions.

Therefore, we can say that this positive fiscal policy has been implemented in an all directional way.

On the wings of fiscal revenue, structural tax cuts are implemented to lighten the burden on enterprises and residents.

By implementing the new tax law of enterprise income tax, raising the standard of deducting the income from personal income tax, temporarily exempting the interest tax on savings deposits and securities trading settlement funds, reducing the tax burden of housing paction links, raising the export tax rebate rate of some products, removing and lowering the export tariffs of some products, reducing the stamp duty rate of securities pactions, changing the policy of unilateral tax collection, adjusting the consumption tax policy, allowing the difficult enterprises to suspend social insurance premiums and reducing the four social insurance premiums, and so on, the burden of enterprises and residents has been reduced by about 280 billion yuan last year.

On this basis, this year introduced a new tax and fee reduction measures to fully implement the consumption value-added tax, implement the refined oil tax and fee reform, cancel and stop 100 administrative fees and charges, and come up with the "tax reduction list" which will reduce the burden of enterprises and residents by about 500 billion yuan.

On the wing of fiscal expenditure, we should expand government public investment and increase the income of middle and low income groups, so as to drive and guide investment and consumption demand.

Last year, after the new central government invested 104 billion yuan in public investment and arranged 20 billion yuan for the recovery and reconstruction in 2009, the central government's public investment this year reached 908 billion yuan, an increase of 487 billion 500 million yuan.

These investments are mainly used in the construction of agricultural infrastructure and rural livelihood projects (208 billion 100 million yuan), the construction of affordable housing (49 billion 300 million yuan), education and health care and other social undertakings (71 billion 300 million yuan), post earthquake recovery and reconstruction (130 billion yuan), energy conservation and emission reduction and ecological construction (68 billion yuan), independent innovation and technological pformation and service industry development (45 billion 200 million yuan), and infrastructure construction including railways, highways, airports and ports (231 billion 700 million yuan).

In addition, by increasing subsidies to farmers, raising the allowances for urban and rural subsistence allowances, increasing the basic pensions of retirees, increasing the allowances and subsidies for living allowances and subsidies for living allowances, and giving direct living allowance to the disadvantaged groups, we have invested 220 billion 833 million yuan in continuously improving the income of the middle and low income groups.

In addition, 20 billion yuan subsidy for household appliances to the countryside and 5 billion yuan subsidy for motor vehicles to the countryside were arranged respectively, so as to implement the subsidy policy for household appliances and automobiles to the countryside.

All these expansionary fiscal measures have been gradually launched and gradually put into place, which is obviously an important force contributing to the positive changes of China's economy.

We are no stranger to positive fiscal policy.

More than a decade ago, the Southeast Asian financial crisis set up a platform for the operation of proactive fiscal policy.

It is precisely with a series of expansionary fiscal measures, which mainly focus on "increasing the national debt - expanding expenditure to stimulate domestic demand", that we can get out of the shadow of deflation and make the economy return to a track of steady and rapid development.

However, the current global financial crisis involves a wider range, a deeper degree of impact and a greater pressure.

Therefore, the operation of the proactive fiscal policy must be "more direct, more powerful and effective" in the words of Premier Wen Jiabao.

As the primary task of economic work in 2009, to maintain steady and rapid economic development, we can use two means of positive fiscal policy and moderately loose monetary policy. However, under the current severe economic situation, the role of monetary policy has at least met two challenges.

On the one hand, the relative surplus of production capacity makes the investment opportunities of enterprises scarce.

On the other hand, employment expectations are falling, making consumers have to increase their savings.

As a result, if monetary policy is moderately loose or too loose, it is sure to have a considerable discount on expanding the efficiency of investment and consumption.

This means that fiscal policy has been pushed to the forefront of macroeconomic regulation and control.

Therefore, it can be said that this positive fiscal policy bears the role of "main attacker".

When necessary, it is better to exchange the imbalance of fiscal revenue and expenditure for the stable development of economy and society, which is both the basic principle of macroeconomics and the basic principle that our country always follows in the choice of fiscal policy.

The last 7 years of positive fiscal policy was achieved after the high cost of government debt and deficit.

So, in the first year, this year's active fiscal policy has arranged a deficit of up to 950 billion yuan and a corresponding scale issuance of treasury bonds.

Therefore, we can say that the cost of this positive fiscal policy needs to be paid more.

This will bring difficulties to the balance of revenue and expenditure. However, if we can temporarily increase the financial difficulties for an economy to pick up quickly and return to a stable and fast development track as soon as possible, no matter what aspect it is, it is a price worth paying.

The writer is deputy director of the finance and Trade Institute of the Chinese Academy of social sciences.