BEIJING, Oct. 8 -- Better budget management leading to a more transparent and efficient fiscal system are the objectives of an action plan announced by China's cabinet on Wednesday.

The decision by the State Council is the first step toward a new round of fiscal reform by 2020. The announcement outlines seven key tasks on the budget, and clarifies the division of roles between the government and market.

A multi-year budget balancing scheme will be introduced to manage unused amounts in any fiscal year, while local government debt will be regulated more strictly. Tax breaks will be gradually withdrawn in sectors and areas where market forces can do the same job.

An open, transparent and regulated budget with restrictions on government spending will bring transformation of government functions to better serve the people, Liu Jianwen, law professor at Peking University, said.

One of the key tasks will be to ensure all income and spending are included in the budget management system. Policymakers have begun to stop unbudgeted money from being spent, but officials still find ways to squander public money through preexisting "private coffers" set up in the absence of adequate supervision.

"Only when all government income is budgeted for can we supervise spending efficiently," said Bai Jingming, deputy director of the Research Institute for Fiscal Science under the Ministry of Finance.

The current budget system deals with about 20 trillion yuan (3.25 trillion U.S. dollars) including social security and state-owned assets. In 2014, fiscal revenue is budgeted to be 13.9 trillion yuan and government spending is expected to be more than 15 trillion yuan.

In August the legislature made the first revision to the Budget Law since 1995. The promised modern fiscal system will be conducive to better resource allocation, social equality and national stability. Key reform should be completed by 2016 and the new system in place by 2020.