People across all walks of life in China are fighting against the Novel Coronavirus. And in a fight against any disease outbreak, public finance plays a key role.
Since the outbreak of the virus, Chinese provinces have implemented high-level public health measures, which require public funds.
By Feb 14, governments at various levels had allocated 90 billion yuan ($12.86 billion) as epidemic prevention and control subsidies, meant to be used mainly for the treatment of those infected with the Novel Coronavirus and help medical institutions to fight the epidemic.
Since the epidemic is yet to be contained, the treatment of the growing number of patients, especially those critically ill, requires huge amounts of funds. The medical staff and epidemic prevention and control workers, too, need more financial help.
At this critical stage, more funds are needed to win the battle against the Novel Coronavirus. Because local financial situations vary, the fight against the Novel Coronavirus has put great pressure on the finances of some regions, especially undeveloped regions.
As such, the central government should provide special support for these areas, such as increasing special transfer payments. The central government could also help affected regions by announcing preferential tax policies. For instance, the authorities could exempt imported goods for fighting the epidemic from value-added tax and consumption tax, not impose import tariffs on medical imports and forgo taxes on medical products and equipment donated by enterprises or individuals to public welfare organisations and hospitals.
The revenues of many industries, especially the catering, tourism, transportation and film industries, have declined because of the epidemic. And, in particular, small and medium-sized enterprises require fiscal support. Even some large-scale enterprises face financial constraints.
But enterprises have to ensure a safe and secure working environment to enable workers to return to their jobs and because the enterprises’ operational costs including human resources cost, epidemic prevention and control costs have greatly increased, they need the government’s support. For instance, the authorities could consider exempting enterprises from income tax for a certain period, say a quarter, or reducing their taxes, administrative fees and rents.
China has continuously increased financial allocation for public health service but, as the Novel Coronavirus shows, as a developing country, China has to further raise the financial allocation for public healthcare. More importantly, the government needs to improve the efficiency of financial investment in the health sector to improve returns.
The author is a research fellow at the National Academy of Economic Strategy, CHINA DAILY