Tax officials talk with employees of a curtain rod manufacturer in Tonglu county, East China's Zhejiang Province. Photo: IC

 

 

Growth in China's tax revenues accelerated to 9 percent year-on-year in the first nine months, according to data released Monday by the Ministry of Finance, in a new sign that the country's economy is improving.

Total tax revenues in the first three quarters of this year reached 8.44 trillion yuan ($1.37 trillion), accounting for 77.3 percent of the whole-year target, the ministry said in a statement on its website.

Tax revenues grew faster in the first nine months compared to the level of 7.9 percent in the first half, and rose by 0.4 percentage points from the same period a year ago.

Growth in value-added tax (VAT), a major tax contributor, rose by 2.4 percentage points compared with the same period of 2012.

Turnover and contract tax on property transactions also rose significantly from a year ago, benefiting from soaring property transactions, according to the ministry.

However, the faster growth in tax income is mainly attributable to the low base of the first three quarters of 2012, when the economy was slowing down. But recent economic data indicates the economy is improving this year, the ministry said.

Industrial output, fixed-assets investment, and total retail sales surged by 9.6 percent, 20.2 percent, and 13.3 percent respectively in the first nine months of this year, according to the National Bureau of Statistics (NBS).

Revenue from sales of residential apartments grew by about 34 percent in the first three quarters, according to the NBS data. 

China's tax revenue is strongly correlated with economic growth, normally moving faster than GDP growth, Zhang Guangtong, vice dean of the School of Taxation at the Beijing-based Central University of Finance and Economics, told the Global Times Monday.

GDP growth in the world's second-largest economy hit 7.8 percent in the third quarter, the fastest quarterly growth so far this year, compared with 7.7 percent growth in the first quarter and 7.5 percent in the second quarter, official data showed Friday.

"We are keeping to our full-year growth forecast of 7.6 percent, and expect growth to moderate in the fourth quarter," Barclays Capital said in a research note sent to the Global Times on Monday. "For 2014, we see growth slowing to 7.1 percent on fundamental challenges and as the government focuses on rebalancing the economy and implementing reforms."

Overall, tax revenue growth will slow down, as the government is trying to alleviate the tax burden on businesses, encourage the development of the services sector, boost consumption, and move up value chain by tackling industrial overcapacity, Zhang said.

Industrial manufacturers contribute the majority of the country's tax revenues, and as firms will focus on upgrading their technologies in response to policymakers' call to be more energy efficient rather than expanding output, their tax contribution will slide, he said.

Meanwhile, facing the slowdown in growth of tax revenues from traditional taxes, the country will launch new taxes to make up the gap, which are likely to be on the agenda for the upcoming Third Plenary Session of the 18th Central Committee of the Communist Party of China, Zhang noted.