Taxation policies should be improved to drive innovation while promoting inclusive economic growth, the G20 finance ministers said on Saturday.

Speaking at the taxation symposium on the sidelines of the G20 Finance Ministers and Central Bank Governors Meetings in Chengdu, Sichuan province, Christine Lagarde, managing-director of the International Monetary Fund, said that taxation policies have a role in boosting innovation, while taxation systems need to be improved to better help innovative enterprises to grow and to ensure that taxation tools do not widen social inequalities at the same time.

Angel Gurria, the secretary-general of the Organisation for Economic Co-operation and Development, called for more efforts to create socially equitable tax systems, at a time when rising income inequality has become a major economic and social challenge in major global economies.

Lou Jiwei, China's finance minister, said that despite much progress in taxation reform on VAT and R&D expenditure, tax policies that could ensure fairer distribution, such as property tax, are yet to be put in place.

"Information collection, taxation capacity building and vested interests are major challenges," said Lou.

The long-awaited property tax could take a rather long time before it can be implemented, experts said, despite the property tax law being included in the nation’s latest legislative plan by the Standing Committee of the 12th National People's Congress, the country's top legislature, earlier this year.

Tharman Shanmugaratnam, Deputy Prime Minister of Singapore said that the country faces similar challenges on how to use tax policies to fuel growth while dealing with inequalities.

Shanmugaratnam suggested that policymakers ought to be more concerned about the welfare of people in low income communities, especially for developing countries with little fiscal policy space.

Bill Moreau, finance minister of Canada, suggested that a stable and predictable taxation system is better able to let tax play its role in boosting investment and growth.