Jing Linbo, a Beijing-based economist, told Xinhua Sunday that although China's revenues declined in the first two months, the government's stimulus package can be conducive to revenue growth.
China's fiscal revenue fell 11.4 percent in January and February from the previous year to 1.02 trillion yuan (US$149.7 billion) as economic growth slowed. Tax revenue shrank 13 percent in the same period to 923.73 billion yuan, according to figures from the Ministry of Finance.
Jing, assistant director of the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences, a government think tank, said two factors contributed to the revenue fall.
One factor was the slower economic growth pace and business profit drops. The other was the tax cuts and proactive fiscal policies taken by the government to stimulate the economy, he said.
China announced a plan last month to halve, to 5 percent, the purchase tax on cars with engine displacements of less than 1.6 liters. In an effort to boost the equity market, the government cut the share trading stamp tax from 0.3 percent to 0.1 percent last April and scrapped the stamp tax on stock purchases in September.
"The government has recently reemphasized its resolution to carry out the fiscal stimulus package as well as support plans for ten industries to shore up the economy. Much of the funds targeted projects to benefit people across the country. This can brake the slowed down economic growth trend and help boost fiscal revenue," added Jing.
The country's Cabinet this year has rolled out support plans for ten industries including iron and steel, auto, textiles and logistics, trailing the 4-trillion-yuan stimulus plan presented in November.
He added that the newly released loan and M1 figures showed the upbeat trend, while operation of companies were on the path to recovery.
China's bank credit continued to expand in February, with Renminbi loans rising to 1.07 trillion yuan, up 827.3 billion yuan from the same month a year ago, the second straight month that new yuan-denominated loans exceeded 1 trillion yuan.
The narrow measure of money supply, M1 (cash in circulation plus corporate current deposits), was up 10.87 percent year on year to 16.65 trillion yuan, and 4.19 percentage points higher than the January growth.
He was "cautiously optimistic" about the country's fiscal revenue growth for the whole year.
China's fiscal revenue exceeded 6.13 trillion yuan for the whole of 2008, up 19.5 percent from the previous year.
(Xinhua News Agency March 15, 2009)
