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China's Interest Tax Increases
China is expected to rake in 15 billion yuan (US$1.81 billion) of income tax on the interest of savings deposits this year, according the State Administration of Taxation (SAT).
Interest tax revenue exceeded 12 billion yuan (US$1.45 billion) during the first ten months of the year.
A SAT official said Friday, December 8, that the interest tax revenue has been growing from month to month since the country resumed levying income tax on interest of savings deposits in November, 1999.
He predicts that the tax revenue will continue to grow next year.
According to SAT, resumption of taxation on interest income has stimulated consumption and investment by individuals and at the same time, slowed down the increase of savings deposits.
During the first half of this year, retail sales in the country surged more than ten percent over the same period last year. The growth rate was more than three percentage points higher than one year ago.
The country's stock markets soared to new highs in the first half year, with the trade volume exceeding the total of last year. The investment funds market has also seen active trading.
The figures prove that Chinese people have diverted part of their savings to consumption and investment, according to SAT.
The structure of personal savings deposits has also changed, said SAT. The amount of current deposits surged while the amount of term deposits dropped, indicating that people are inclined to spend more on consumption and investment in the short term.
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