China: Tax Coffers Bulge Out with GrowthChina's tax revenue rose an average of 15 per cent year-on-year during the Ninth Five-Year Plan period (1996-2000), said Jin Renqing, director of the State Administration of Taxation.The country's tax revenue annually increased by 100 billion yuan (US$12 billion) during the five years, with last year's revenue surpassing 1 trillion yuan (US$120.4 billion), Jin said. Aggregated tax revenue during the period is expected to reach 4.67 trillion yuan (US$562.7 billion), 2.2 times that of the Eighth Five-Year Plan period (1991-95), he said. The rapid growth in tax revenue was mainly due to the country's sustainable, rapid and healthy economic development, Jin said. China's gross domestic product grew at an average rate of 8.5 per cent per year from 1996-2000. A boost in the country's stock market and the central government's major campaign to fight smuggling also contributed to the tax revenue increase. China collected 24.5 billion yuan (US$2.9 billion) in stamp duty from the country's stock market in 1999, rising from 2.6 billion yuan (US$313 million) in 1995. During the first eight months of this year, 35.5 billion yuan (US$4.3 billion) was collected in stamp duty, an increase of 85.1 per cent from a year ago. Import tax in 1999 accounted for 103.9 billion yuan (US$12.5 billion), an increase of 78 per cent from 1998, due partly to the country's campaign to stop smuggling. The State collected 92.4 billion yuan (US$11.1 billion) from such tax during the first eight months of this year, up 41 per cent year-on-year. The increased tax revenue can be also attributed to the strengthened efforts to collect taxes, the end of some preferential policies including tax exemption for some foreign-funded enterprises and the levy of a deposit income tax for individuals, Jin said. "The increased revenue provided efficient support to the country's economic development, social stability and improvement of people's living standards,'' the director said. Taxation, an important macro-control method, gave China's economy a soft landing during the early years of the Ninth Five-Year Plan period, he said. Taxation helped the country's economy take a turn for the better, as the central government began to adopt an active fiscal policy and stable monetary policy to fight for deflation after the Southeast Asian financial crisis in 1997. For example, during the five-year period a certain amount of real estate taxes were exempted to ignite the real estate market and taxation policies were readjusted to encourage foreign investment. The State has also began to levy a deposit income tax for individuals beginning last year to encourage domestic consumption and has raised tax rebates to encourage exports. With a goal of increasing revenues and reducing expenditures, the government has begun reforming its fiscal system, according to Finance Minister Xiang Huaicheng. The country will actively engage in reform of its tax system in the coming years, Xiang said. The value-added tax levy would gradually be shifted. Instead of taxing production, it would target consumption, the minister said. It is also expected to expand the scope of consumption taxes to cover more goods and services. The country plans also to adopt a unified income tax system for domestic and foreign-funded enterprises. The personal income tax system is to be improved and an inheritance tax is to be adopted to narrow the gap between the rich and the poor, Xiang said. (Source: chinadaily.com.cn) |
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