China should cut income taxes to stimulate growth and support the slowdown of the economy. Lou Jiwei, a former finance minister, suggests that this measure be implemented as the country faces a trade war with the United States, Reuters reports.
The country has been experiencing the country's weakest economic growth since the global financial crisis, and is accelerating road and rail projects, prompting banks to increase lending and cutting taxes to ease pressures on businesses.
"There is room to cut both income taxes (corporate and personal)," said Lou Jiwei, current chairman of the National Social Security Council (NCSSF), during a financial forum.
The Government has been cutting taxes and value-added rates for companies, but still needs to reduce the 25% share for corporate income tax. China should not launch any further round of investment in large-scale infrastructures to stimulate growth, as "such a move could worsen the country's debt risks," Lou Jiwei said.
Local governments in China are already burdened with heavy debt and the government "should use its fiscal tools to help reduce debt risks in financial institutions," said the former finance minister. China's social security system is "fragmented and unsustainable as its population ages," said Lou Jiwei.