China's Taxation Overtaking Trillion Yuan in 2001, and Then?

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Last updated at: (Beijing Time) Tuesday, January 15, 2002

China's Taxation Overtaking Trillion Yuan in 2001, and Then?

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2001 saw China's nationwide taxation overtake RMB 1.5 trillion-yuan, an unprecedented breakthrough to have reached RMB 1.5157 trillion-yuan. It is a rise of 19.7 percent as against that of the previous year with added revenue amounting to RMB 249.6 billion-yuan. But what is more significant is that the monthly taxation surpassed the revenue of RMB 100 billion-yuan on the average, thus resulting the national taxation in breaking through RMB 1 trillion-yuan for the first time in history.

Facing with the successive big increase of the national taxation some people felt puzzled, holding an opinion that the increase rate of taxation is asymmetrical with that of the GDP. They think that in the circumstance in which we are practicing an active financial policy the increase of taxation will offset the efficiency for carrying out the policy of expanding domestic needs.

How to take a correct judgement of the situation in which the national taxation revenue have overtaken RMB 1 Trillion-yuan?

First of all we must understand that this is decided by China's national condition in which we should not make a correspondence between the increase rate of taxation and that of the GDP. As compared to the developed countries of market economy China still sees a very short history in employing the modern taxation and the system is still incomplete with quite some taxation leakage. There is much potential for manoeuvring to close the loophole and strengthen the taxation. Judging from the taxation proportion in the GDP, that in the United States comes to some 30 percent while China's ratio has just reached 15 percent, indicating a fact that we still fall far behind the objective of "collecting what we should have collected".

In 2001, China had carried on the implementation of the policy of expanding the internal needs and enforced the tenacity in the adjustment of economic structure, thereby bringing about a lot of positive changes in many economic factors. The annual GDP reached RMB 9.58 trillion-yuan, an increase of 7.3 percent as against that of the previous year. The industrial enterprises witnessed a better efficiency. Out of 14 monitored state key enterprises 13 stood out profit making in the trade as a whole. This has laid a solid foundation for the increase of taxation and expansion of tax resources. According to the rough estimation, the previous year saw a direct taxation increase of around RMB 120 billion-yuan due to the economic growth, accounting for almost 50 percent of the total increase in taxation.

Besides, the adjustment of the state taxation policy, such as levying for vehicle purchase, has also helped open a new channel for taxation. As estimated the taxation policy adjustment has brought a taxation increase of RMB 50 billion-yuan, accounting for around 20 percent of the total taxation growth. And due to other special factors, the increase in the enterprise income tax came to RMB 20 billion-yuan, occupying some 10 percent of the total increase of taxation.

Another important factor in the taxation growth is due to the enforcement in taxation control and supervision. According to statistics, the previous year witnessed a taxation increase of RMB 50 Billion-yuan owing to the enforcement in taxation supervision, taking up about 20 percent of the total taxation increase. And it also saw a big growth in the value-added taxes, the main reason lying in the overall implementation of the golden taxation policy. This rendered an effective supervision and control over the tax fraud, dealt a heavy blow at such illegal behavior as false writing of value-added invoice, thereby helped in diminishing the leakage of the value-added taxes.

Based on the analysis of experts, judging from the taxation increase in 2001, China is now on the way into a benign circulation of taxation growth and economic development. This is manifested in the following aspects: First, the monthly taxation revenue averages above 100 billion yuan in Renminbi, raising the revenue scale onto a new phase. Secondly the taxation increase depends mainly on the two domestic ones of value-added and consumption taxes and three items of income tax, i.e. taxes from the enterprises of internal and foreign capitals and personal income tax as well. Thirdly, the disparity in taxation deceased between the eastern regions and the western regions. Fourthly it saw a big increase in scale of the value-added taxation, thus putting right a situation in which the increase in value-added taxation was much lower than the taxation growth as a whole in the past few years.

Experts hold, China is a big country on the way of development. It is absolutely necessary and urgent to establish a stable, balanced and strong national finance. We've seen a big and successive increase in taxation in recent years and this has played a very big role in the financial guarantee for the reform, development, state stability and strengthening the capability of macro-control by the state.

By PD Online Staff Han Rongliang

Tax Revenue of China in 2001 Tops US$182 Billion

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