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Sharp slowdown seen in fiscal revenue

By Fang Yunyu (Global Times)

08:22, March 07, 2013

China's fiscal revenue growth saw a sharp decline in January and February, mainly due to the economic slowdown, the Ministry of Finance disclosed Wednesday.

According to statistics posted on the ministry's website, the country's fiscal revenue reached 2.24 trillion yuan ($360 billion) during the first two months, up by 7.2 percent year-on-year. But during the same period last year the growth rate was 13.1 percent year-on-year.

The central government's fiscal revenue increased by 1.6 percent year-on-year during the first two months, compared to the 11.1 percent growth registered in the same period in 2012.

"The relative slowdown of national fiscal revenue, especially for that of the central government, is mainly a result of the economic slowdown, plus the structural tax reduction," a statement from the ministry said.

Sun Yudong, a professor at the Public Management School at the Renmin University of China, told the Global Times Wednesday that because sales tax and corporate income tax account for a relatively big proportion of the central government's fiscal revenue, "such a big growth slowdown demonstrates that our business environment has deteriorated in the past two months."

"As to the ongoing structural tax reduction - which is mainly replacing the existing business tax with value-added tax - I don't think such a change will cause such a sharp decline in growth (of the central government's fiscal revenue)," Sun said.

However, the cutback on extravagance that the government has promoted may have influenced luxury product sales, Sun noted, which could cut tax revenue from domestic consumption.

The ministry said that national fiscal revenue from domestic sales tax between January and February rose by 4.2 percent year-on-year, compared to last year's rise of 14.4 percent.

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