Three, deepening the reform of the fiscal and taxation systems. Finance is the foundation and an important pillar of state governance. Good fiscal and taxation systems are the institutional guarantee for improving resources allocation, maintaining market unity, promoting social equity, and realizing enduring peace and stability. Developed on the basis of the tax distribution system reform initiated in 1994, the current fiscal and taxation systems have played an important role in increasing the government's financial strength and promoting the rapid growth of the economy. As the situation changes, the current fiscal and taxation systems cannot effectively respond to the requirements for dividing powers between the central and local governments to improve state governance. They have lagged behind our effort to transform the economic growth pattern and promote the sustainable and healthy development of the economy and society, and are causing problems that hinder economic and social development.

Fiscal and taxation system reform is one of the key points in deepening reform comprehensively. The reform mainly includes improvement of the budgeting and taxation systems, and establishment of a system in which authority of office matches responsibility for expenditure.

The Decision stipulates that we will adopt a complete, standardized, open and transparent budget system, and appropriately increase the authority of office and responsibility of expenditure of the central government, including those concerning national defense, foreign affairs, national security, and unified national market rules and management. The authority of office over some social security programs, and the construction and maintenance of major trans-regional projects will be shared by the central and local governments, and the authority of office will be gradually clarified in this regard. The central government can delegate some expenditure responsibilities to local governments through transfer payments. In terms of trans-regional public services with great impacts on other regions, the central government will share some of the expenditure responsibilities of local governments through transfer payments.

The main aim of the reform is to clarify authority of office, reform and stabilize taxation, implement transparent budgeting and increase efficiency. It also aims to accelerate the development of a modern fiscal system that is conducive to the transformation of the economic growth pattern, the establishment of a fair market under unified rules, and the promotion of equal access to basic public services; develop fiscal and taxation systems that are compatible with the financial resources and authority of office of the central and local governments; and mobilize the initiative of both the central and local governments.

Reform of the fiscal and taxation systems is a step-by-step process and will take some time to complete. The Party Central Committee has clearly stated that we must maintain the stability of the current financial pattern of the central and local governments and further rationalize the division of revenues between them.