China's tax revenue growth slowed last month, but still offers the government substantial opportunities for tax cuts and other stimulus measures, experts have said.
Tax revenue in July grew 13.8 percent year-on-year to 532.33 billion yuan (US$77.85 billion). The growth rate is 19.3 percentage points lower than last July and 19.7 percentage points lower than the first half, the Ministry of Finance said in a statement.
"Despite the slowdown, the government is still very likely to reach its tax growth target," said Zhuang Jian, an economist with the Asian Development Bank. "The government will even run a moderate surplus by the end of the year."
The government's fiscal revenue grew 33.3 percent year-on-year to 3.48 trillion yuan in the first half, much faster than the government's projected increase of 14 percent for the whole year. But some analysts are worried that the economic slowdown may weaken the government's fiscal muscle.
"Even if tax revenue growth remains at its current level, it won't be difficult for the government to achieve its aim," Zhuang said. "And the policymakers still have room for stimulus measures."
Top policymakers have said they will strive to maintain stable economic growth in the face of weakening overseas demand. Vice-Premier Li Keqiang said the government will boost domestic demand to buffer the nation from impact of a global economic slowdown.
In the first half, China's economic growth slowed to 10.5 percent, compared with 11.9 percent for the whole of last year. In the meantime, the profits of large-scale industrial enterprises expanded 20 percent year-on-year. Although growth still appears robust, it is only about half of the rate compared with the same period last year.
Meanwhile, rising costs are eating into the profits of smaller firms. According to officials from the National Development and Reform Commission, more than 67,000 small and medium-sized enterprises with a sales revenue of over 5 million yuan went into bankruptcy in the first half of the year.
The weaker economy has already had an impact on corporate profits and personal incomes, as indicated by the tax growth figures.
In the first half, corporate income tax revenue declined 4.2 percent year-on-year to 149.64 billon yuan, while individual income tax revenue rose only 8.2 percent to 28.09 billion yuan, compared with 30.5 percent in the same period a year ago.
(Xinhua News Agency August 23, 2008)