(Yicai Global) June 17 -- China’s revenue from personal income taxes fell for a third month in a row in May, as Covid-19 outbreaks and other factors took a toll on government coffers.
Tax revenue from personal incomes dropped 5.7 percent from a year earlier to CNY104.5 billion (USD15.6 billion) last month, according to finance ministry data published yesterday. The tax haul fell 9.5 percent in April.
Covid-19 broke out in many parts of China in those two months. Some badly hit cities were forced to shutter schools, factories, shops and other businesses, shrinking incomes and causing job losses as people sheltered at home.
“My company posted a significant drop in revenue due to the pandemic,” a worker at one internet firm told Yicai Global. As a result, “it cut executive salaries, laid off some staff, and reduced the wages of other employees.” She said her salary had fallen by at least CNY5,000 (USD746) in May.
China’s unemployment rate has remained high, with surveyed urban joblessness falling to 5.9 percent last month, from 6.1 percent in April, according to the National Bureau of Statistics.
In addition to wages, personal income tax also accrues from property transfers, interest payments, dividends and bonuses.
Tax revenue from the sales of previously owned homes fell, as buyers stayed away amid a downturn in the property market. Government income from tax on equity transfers may also have been dragged lower by market volatility. Stamp duty on securities transactions fell in May on an annual basis.
In the January to May period, revenue from personal income taxes rose 8.3 percent from a year ago to CNY655.9 billion. That was higher than the 1.4 percent growth in the overall tax take, reflecting a generally steady increase in incomes.
With Covid once more under control, income tax revenue is expected to begin climbing again. It will be helped by factors such as the expedited implementation of policies to bail out businesses, the emerging effects of policies and measures to steady economic growth, and the gradual recovery of key economic indicators.
Editor: Peter Thomas