The economic slowdown will continue to take a toll on China's fiscal revenue, which witnessed its first month of negative growth this year in October, the 21st Century Business Herald reported on Tuesday.
China's fiscal revenue fell 0.3 percent in October year-on-year to 532.9 billion yuan (US$78.07 billion) owing to tax cuts, economic slowdown and worsening performance of enterprises, the Ministry of Finance said last week. Fiscal expenditure in the same month rose 16.4 percent year-on-year to reach 414.32 billion yuan.
Central government revenue registered a sharp drop to 277.64 billion yuan last month, 8.4 percent down from a year earlier.
"The apparent slowdown of the Chinese economy will definitely have an impact on fiscal revenue," said An Tifu, vice-chairman of the Chinese Taxation Institute.
In his view, the downturn of fiscal revenue has yet to hit bottom, as the economy is likely to keep falling owing to the financial crisis and a possible global recession, and future adjustments within the national economy itself.
Marco economic indicators directly related to tax intake, such as trade volumes, corporate profits and residents' disposable income, have all shown signs of slowdown. Some have even registered negative growth.
Under such circumstances, China should shift its fiscal policies to maintain growth and development, An said.
"An expansive fiscal policy should be considered in micro control measures and China is also capable of doing so," he told the newspaper.
At an executive meeting of the State Council on November 5, Premier Wen Jiabao announced a 4 trillion yuan (US$586 billion) stimulus package for the next two years and the shift of the previous "prudent" fiscal and "tightening" monetary policy to a "proactive" fiscal and a "moderately loose" monetary policy.
In the latest move to shore up flagging exports, the Ministry of Finance announced on Monday a list of 3,770 items involved in the third round of export tax rebate increases this year.
The tax rebate rates on these items, mainly labor-intensive, mechanical and electrical products, will range from 11 percent to 13 percent when the new rule takes effect on December 1.
China will also eliminate export duties on certain types of steel, chemical and grain products and reduce export duties on some fertilizer products from December 1.
(Chinadaily.com.cn November 18, 2008)
