(Yicai Global) July 20 -- China’s revenue from taxes surged 16.5 percent in the first six months from the same period last year, thanks to the rebound in the economy and last year’s low base line, and much faster than the country’s gross domestic product growth rate of 5.5 percent over the period.

China’s tax haul in the six months ended June 30 came to almost CNY10 trillion (USD1.4 trillion), according to the latest data.

The large-scale value-added-tax refunds rolled out by the government from April last year have now come to an end, Xue Xiaoqian, deputy head of the Ministry of Finance’s treasury payment center, said at a press briefing yesterday. This has greatly boosted the country’s tax revenue from VAT which surged 96 percent in the first six months year on year to CNY3.7 trillion (USD522.4 billion).

But revenue from corporate income tax slumped 5.4 percent over the period, as corporate profits continue to be squeezed. And revenue from personal income tax dipped 0.6 percent. This is directly connected with the economic downturn which has resulted in layoffs and pay cuts in some sectors as well as a high youth unemployment rate, several experts told Yicai Global.

The high tax income spurred the country’s general public budget revenue in the first half to surge by 13.3 percent year on year to CNY11.9 trillion (USD1.6 trillion).

But non-tax revenue, such as the sale of land use rights, dipped 0.6 percent over the period to CNY2 trillion (USD278.3 billion). The sale of land use rights has been slow due to the sluggish property market.

“The overall recovery in China’s economic operations and the sound long-term growth momentum will offer significant support to the increase in fiscal revenue,” Xue said. "However, now that VAT refunds are back to normal, the monthly growth in China’s fiscal revenue will narrow,” he added.

Tax and fee rebates for this year are expected to reduce taxes by CNY1.8 trillion (USD250 billion). Last year, VAT refunds amounted to CNY2.2 trillion.

Local Coffers

Local governments’ revenue jumped 13.5 percent over the period to CNY6.5 trillion (USD904 billion) and all 31 provincial-level regions achieved yearly growth.

During the first half, China’s general public budget expenditure advanced 3.9 percent year on year to CNY13.3 trillion (USD1.8 trillion). The majority of this went on supporting people’s basic livelihood, rural revitalization, regional strategies, education as well as key science and technology programs, Xue said.

In the first half, expenditure by government funds narrowed 21.2 percent from a year earlier to CNY4.3 trillion (USD598.5 billion), thanks to the issuance of local government special bonds, but it was still almost double the revenue raised by government funds.

China’s general public budget revenue is expected to climb 6.7 percent this year from the year before, according to the 2023 budget reports from the country’s central and local governments.

Editors: Zhang Yushuo, Kim Taylor