Although China's GDP growth rate slipped only 1.8 percentage points year-on-year in the first half this year, the growth rate of financial income plunged 19 percentage points year-on-year during the same period. As a result, municipal taxation agencies have greatly stepped up their effort to collect tax levies.
The country's Ministry of Finance reported that the national financial income rose 12.2% year-on-year to 6,379.5 billion yuan (US$999.51 billion) in the first half of this year. Revenue from taxation rose 9.8% to 5,493.2 billion yuan (US$860.71 billion). The growth rates were 19 percentage points and 19.8 percentage points, respectively, lower than corresponding growth rates during the same period last year.
The ministry attributes the plunge in the growth rate of financial income to the economic slowdown, declining prices, and structural tax cuts.
Statistics show that China's GDP growth reached 7.8% in the first half this year, compared with 9.6% growth a year earlier, while the growth of financial income dropped from 31.2% to 12.2%.
Sun Gang, a research follow at the ministry, reports that when the GDP rises, taxation income will increase at a scale much higher than GDP growth, but when GDP declines, tax revenues will drop much steeper than GDP decline.
In the first six months of the year, value-added tax, the largest tax item, advanced only 8.1%, due mainly to slowdown in the industrial added-value, declining prices — especially ex-factory prices — and structural tax cuts.
Except coal, crude oil, and tobacco, which racked up over 80% growth in corporate income tax, corporate income tax for other lines inched up only 1.9%, especially oil products, steel, textiles, power, electrical apparatuses, special equipment, chemicals, and telecom equipment, whose corporate income tax dropped year-on-year.
Despite a drop in the growth rate of major taxes, the revenue from small municipal taxes experienced rapid growth.
In June, for instance, the nation's land value increment tax jumped 56.6% year-on-year to 36.6 billion yuan (US$5.73 billion); tax for arable land leapt 39.7% to 28.2 billion yuan (US$4.41 billion); and the tax for rural land utilization rose 51.2% to 18.4 billion yuan (US$2.88 billion). Meanwhile, municipal non-tax revenues also rose 26% to 724.6 billion yuan (US$113.53 billion).