China Jan-Sept tax growth slows sharply

17 january 2013

BEIJING — Tax revenues slowed sharply in the first nine months of the year due to the economic downturn, falling prices and structural tax cuts, the Ministry of Finance (MOF) said Monday.

In the first three quarters, tax revenues nationwide rose 8.6 percent year-on-year to 7.74 trillion yuan, 18.8 percentage points slower than the growth seen in the same period last year, according to a statement from the ministry.

The statement said revenues from production-related taxes all saw slowing growth from a year earlier.

Revenues from value-added taxes grew by 5.8 percent, a growth rate 12.9 percentage points lower than that of the same period last year. Revenues from corporate income tax expanded by 14.7 percent, down 21.1 percentage points.

The MOF attributed the deceleration to dropping economic growth, lower price levels and dropping property sales growth, as well as the country’s structural tax reduction policies.

Official statistics released last week showed that the economy expanded 7.4 percent year on year in the third quarter, slowing for the seventh straight quarter and down from 7.6 percent in the second quarter and 8.1 percent in the first.

The consumer price index (CPI), a main gauge of inflation, grew 1.9 percent year-on-year in September, easing from 2 percent in August and 6.1 percent in September 2011.

Slower CPI growth contributed to falling growth for tax revenues, as the revenues were calculated using current prices, the MOF said.

The ministry also cited structural tax reduction policies as a cause of slower tax revenue expansion.

The government has further intensified its structural tax reduction efforts to maintain steady economic growth and stabilize prices since the beginning of the year.

The country has implemented a raft of policies to relieve tax burdens for medium- and low-income groups, support small- and micro-sized firms, promote the development of agriculture and rural areas, boost export growth and spur coordinated growth among different regions.