Why this is important:

China introduced a tax-sharing system in 1994 to increase the central government's tax revenue. Under the tax overhaul, value added tax - the single largest source of Chinese government revenue - was shared between the central government (75 percent) and local governments (25 percent).

With such a disparity, local governments were forced to devise ways to fund their expenditures and increasingly rely on land transfer.

Mounting debts have become the Sword of Damocles for local governments, of which the financial accounts have been left in the red after years of fervor for infrastructure investment.

What to expect:

Adjustments to tax revenue sharing among different levels of government are expected to be discussed at the meeting.

Tax on resources and expansions of property tax can also be on the agenda, Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance told The Wall Street Journal.