Slower tax rev­enue growth re­ported

China Daily (Hong Kong) - - TOP NEWS - By WANG YANFEI wangyan­fei@chi­nadaily.com.cn

China saw slower year-onyear tax rev­enue growth in 2016, data from the na­tion’s tax au­thor­ity showed on Thurs­day.

Slower growth of tax rev­enue points to higher short­term pres­sure on gov­ern­ment spend­ing, but the econ­omy will ben­e­fit in the long run af­ter tax cut poli­cies for en­ter­prises grad­u­ally show re­sults, ex­perts said.

China col­lected 11.59 tril­lion yuan ($1.67 tril­lion) in taxes last year, up by 4.8 per­cent year-onyear, but lower than the 6.6 per­cent growth rate in 2015, data from the State Ad­min­is­tra­tion of Tax­a­tion showed.

The growth rate of tax rev­enue was 1.9 per­cent­age points lower than the 6.7 per­cent GDP growth rate, show­ing a wider dif­fer­ence com­pared with a year ago.

The tax rev­enue growth rate con­tin­ued to run slower than that of GDP growth start­ing in 2012.

Wang Jun, di­rec­tor of the ad­min­is­tra­tion, said tax cut poli­cies played a ma­jor role in the slow­ing trend of tax rev­enue, re­fer­ring to value-added tax re­form launched in 2012.

The re­form aimed to re­place stan­dard busi­ness in­come taxes with a value-added tax.

The re­form spread to the con­struc­tion, real es­tate, fi­nance and con­sumer ser­vices sec­tors last year.

If tax rev­enue con­tin­ues to slow down, this would put pres­sure on gov­ern­ment spend­ing in the next year, ac­cord­ing to Zhang Lianqi, a fi­nan­cial ex­pert whom the min­istry con­sults.

“But if tak­ing a long-run per­spec­tive, say, three to five years, that would be a dif­fer­ent sce­nario,” said Zhang.

Zhang said en­ter­prises that ben­e­fited from the tax re­form would re­vi­tal­ize the econ­omy in the long run, af­ter the na­tion re­lies less on stim­u­lus mea­sures.

Hu Yi­jian, a pro­fes­sor of eco­nom­ics at Shang­hai Uni­ver­sity of Fi­nance and Eco­nom­ics, said slower growth of tax rev­enue should not be a con­cern in the long run.

Hu said “slow­ing of tax rev­enue shows that progress has been made in squeez­ing out as­set bub­bles”, be­cause a large pro­por­tion of tax rev­enue came from the cap­i­tal mar­ket in the past sev­eral years.

Hu sug­gested that be­cause a fur­ther slow­ing of tax rev­enue growth is likely, gov­ern­ments should cut ex­ces­sive spend­ing

A state­ment re­leased af­ter the Cen­tral Eco­nomic Work Con­fer­ence in De­cem­ber showed that the gov­ern­ment put a high pri­or­ity on pre­ven­tion of fi­nan­cial risks.

Slow­ing of tax rev­enue shows that progress has been made in squeez­ing out as­set bub­bles.” Hu Yi­jian, a pro­fes­sor of eco­nom­ics at Shang­hai Uni­ver­sity of Fi­nance and Eco­nom­ics

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