Growth in China's fiscal revenue is picking up in the second half of this year but the central government may struggle to meet its annual target due to tepid economic recovery and tax cuts, the Ministry of Finance said yesterday.
The country's fiscal income rose 7.5 percent in the first half to 6.86 trillion yuan (US$1.12 trillion), after rising 12.2 percent in the same period of last year, the ministry said in a statement.
Year-on-year growth gathered pace from 6.9 percent in the first quarter to 8.7 percent in the second quarter due to slower growth in the second quarter of last year, the statement said. The pace was 4.7 percentage points lower than the same period of last year, and slightly lower than the country's economic growth of 7.6 percent in the first half, it added.
The ministry said the country's fiscal revenue will not increase rapidly in the second half due to the slow economic recovery, the on-going tax cut plan, and an expected slowdown in the growth of property development-related taxes.
During the first six months, the central government's fiscal revenue rose by only 1.5 percent over the same period of last year to 3.23 trillion yuan.
The central government's revenue growth recovered to 3.1 percent in the second quarter from a decline in the first, but it will "have a tough time" completing its annual target of 7 percent, the statement said.
The ministry said revenue from value-added tax, consumption tax and tariffs have either declined sharply or registered slower growth during this period, contributing to the slower growth in central fiscal revenue.
Fiscal income of local governments rose 13.5 percent in the first half to 3.63 trillion yuan, mainly driven by a surge in taxes from home and land sales, according to the statement.
In June alone, fiscal revenue hit 1.24 trillion yuan, up 12.1 percent from a year earlier, according to the ministry.
A pilot program to reduce the tax burden of Chinese companies through replacing the business levy with a value-added tax will be expanded to more regions in the second half, which will further cut the fiscal revenue, said the ministry.
Government spending for the first six months rose 10.8 percent to 5.97 trillion yuan, with central government spending increasing 8.1 percent and local governments' spending rising 11.3 percent during this period.
The expenditure on education rising 10.7 percent, medical and health services up 22.3 percent, and energy-saving and environmental protection up 14.1 percent.
