1. Generic information
The total tax revenue of the People’s Republic of China in 2000 reaches RMB 1266 billion yuan, with an increase of 238.4 billion yuan and 22.8% growth over the previous year. In this total, revenue from domestic VAT and excise reaches RMB 553.1 billion yuan, with 14.1% increase of 68.5 billion over the previous year. Enterprise income tax (not including revenue from foreign invested enterprises and foreign enterprises) generates 144.1 billion yuan, with an increase of 43.2 billion, a 42.8% increase over the previous year. Securities exchange stamp tax yields 47.8 billion yuan, 95.2% increase of 23.3 billion over the previous year. 14.9 billion yuan is raised from the income tax on the interest of individuals’ savings deposit, with an increase of 14.8 billion. 149.3 billion yuan is generated from VAT and excise of imports collected by the customs on behalf of tax authorities, a 43.7% increase of 45.4 billion over the same period last year. The above statistics demonstrate the successful fulfillment of the projected revenue objective of the 9th Five-Year Plan. The total tax revenue raised in the five years covered by the 9th Five-Year Plan reaches RMB 4700 billion yuan, 2.2 times that of the 8th Five-Year Plan, 300 billion more than the total collected in the previous eight Five-Year Plans, with an annual increase of over 130 billion and annual growth rate of 16%. Tax revenue and GDP ratio in 2000 reaches 14.2% with an increase of 4 percentage points compared with 10.2% at the end of the period of the 8th Five-Year plan. The ratio of revenue going to the central government to the total revenue reaches 59%, an increase of 2 percentage points compared with 57% at the end of the 8th Five-Year plan.
2. Major characteristics of 2000 tax revenue
Tax revenue in 2000 can be characterized from following perspective:
(1) Historical breakthrough in revenue increase. There has been an annual tax revenue increase of over RMB 130 billion yuan since the implementation of the 9th Five-Year Plan. Despite the dual pressure of the Asian financial crisis and the domestic disaster of heavy flood in 1998, the goal of increasing revenue by 100 billion yuan was surpassed. Subsequent to a record high of over 1000 billion yuan of the total amount of revenue in 1999, the annual revenue goal of 2000 was surpassed one month prior to the original deadline, with an unprecedented increase of 234.8 billion yuan. Thus the historical breakthrough of generating an annual increase of over 200 billion yuan has been achieved.
(2) Steady rise of two ratios. Tax revenue/GDP ratio was 14.2% in 2000, four percentage points up compared with 10.2% at the end of the 8th Five-Year Plan period. This ratio maintained an upward momentum in the 9th Five-Year Plan period, 10.4% (1996), 11% (1997), 11.4% (1998) and 12.6% (1999) and 14.2% (2000) respectively. The ratio between the amount of central revenue and total revenue in 2000 is forecast to reach 59%, over 2 percentage points up compared with 56.7% in 1995.
(3) The amount of revenue collected monthly in 2000 generally in proportion. The amount of revenue collected monthly in 2000 (except February when Chinese Lunar New Year was celebrated) ranges from 90 billion yuan to 130 billion yuan, with an average of 105.5 billion yuan, 20 billion up compared with the monthly amount previous year. This demonstrates the steady improvement of national economy and the stringent administration of proportional remittance of revenue to the treasury.
(4) Rapid increase of revenue derived from tax on imports collected by the customs on behalf of tax authorities and stamp tax on securities exchange. With the upturn in national economy in 2000, the total volume of imports sharply increased, the securities exchange market became vibrant and investment was expanded, which ensured that remarkable increase. The revenue plans made at the beginning of the year for the collection of these two types of revenue were fulfilled three and seven months in advance. Revenue from tax on imports collected by the customs on behalf of tax authorities reached 149.3 billion yuan, 45.4 billion up with a growth rate of 43.7% over the previous year and surpassing the budget by 46.3 billion yuan. 47.8 billion yuan was raised from stamp tax on securities exchange, increasing by 95.2% with an amount of 23.3 billion and surpassing the budget by 28.5 billion yuan. The consolidated amount of increase reached 68.7 billion accounting for 29% of the total revenue increase in 2000.
(5) Sharp increase of revenue derived from domestic VAT and excise. 553.1 billion yuan was raised from these types of tax, increasing by 68.5 billion with a growth rate of 14.1% over the previous year. In this amount, 466.8 billion was derived from domestic VAT increasing by 66.7 billion and growth rate of 16.7%, while 86.3 billion was raised from domestic excise increasing by 1.8 billion and growth rate of 2.2% over the previous year. Enterprise income tax generated 144.1 billion increasing by 43.2 billion and a growth rate of 42.8%. The large profit gain propelled by the sharp price increase in crude oil and the reorganization of the two big petroleum corporations is one of the facts that account for the revenue growth raised from enterprise income tax. In addition, 14.9 billion yuan was raised from personal income tax on the interest of the individuals’ savings deposit in 2000.
(6) Marked increase in tax refund for the exported products. In 2000 the increase of refund rate, upturn in world economy, expansion of export by enterprises themselves and rather low amount of refund compared with the previous year have contributed to the rapid development of export with a concomitant large increase of refunding. 81.1 billion yuan of refund was granted by tax authorities at all levels in 2000, with a growth rate of 29.2% and an increased amount of 18.3 billion.
3. Driving forces for the revenue increase in 2000
Subsequent to the unprecedented amount of revenue of over 1000 billion yuan, annual increase of revenue in 2000 exceeded 200 billion yuan, to which the following three facts contribute.
(1) The sustained development of national economy and improvement of business efficiency generated rich tax source for the revenue growth. With the proactive fiscal policy, stable monetary policy and industrial restructuring policy being implemented to the letter coupled with the upturn in world economy and booming of international markets in 2000, a significant favorable turn occurred in the national economy. The marked improvement of business efficiency due to the fact that the trend of profit decrease and the expansion of loss of enterprises was curbed and the efficiency in the important industries of steel and iron, textile, coal, sugar manufacture, petroleum and petro-chemicals was greatly improved gave rise to remarkable revenue increase. As indicated by preliminary studies, the portion of increase of revenue that is directly attributable to the improvement of economy and efficiency amounts to 155 billion yuan, accounting for 2/3 of the total increase.
(2) The policy and price factors generated a considerable amount of non-
recurrent revenue. The following facts contribute to the increase of the non-recurrent revenue: the expiration (because they were due) of such preferential regimes as tax rebate for the excessive part of tax burden to Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and foreign-capital enterprises and enterprises affiliated with schools; the decrease of inventory credit at the beginning of the year compared with the same period last year; and the resumption of levy of income tax on the interest of individuals’ savings deposit. In addition, the increase of price of such raw materials as crude oil and steel also played an important role in increasing the amount of non-recurrent revenue. The increase in this regard amounts to 50 billion yuan accounting for 22% of the total increase.
(3) The strengthening of tax administration at different levels promoted the the revenue increase. The significant policies made by the central government were carried out to the letter by tax authorities at different levels. The principle of ‘strengthening administration, blocking loopholes, penalizing corruption and rectifying arrears’ was strictly upheld. The guiding thought of ‘administering tax in accordance with law and managing administrators’ team in line with regulations’ was seriously observed. The pace of construction of the Golden Tax Project was quickened. The observance of fiscal disciplines and the rectification of tax order were strengthened. Supervision and check of law enforcement and administrative power was further enhanced. All these gave rise to marked improvement of the quality and efficiency, which generated an approximate revenue increase of 30 billion yuan.
In addition to the aforementioned, departments of industry and commerce, the customs, foreign trade and economics, public security, procuratorate and court have cooperated with tax authorities in mobilizing financial resources and contributed to the successful rectification of tax arrears, crackdown on tax evasion and fraud and refusal to pay tax by violence and the maintenance of tax administration order, which ensured the timely remittance of revenue in full to the treasury.
Overall analysis shows that marked increase of revenue in 2000 matches the momentum of strong development of economy, tax policy incentives and the price increase of crude oil. With factors of revenue raised by the customs on behalf of tax authorities, the stamp tax on securities exchange, price increase and strengthening of administration being excluded, the amount of revenue in 2000 approximately increased by 9.5% compared with the same period previous year, fitting with the improvement of economy and business efficiency.
(State Administration of Taxation 01/04/2001)
