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Rapid growth of tax revenues driven by economic rebound

08-02-2010 09:38 BJT

By Li Woke

China's tax revenue rose 31 percent to 3.86 trillion ($569.78 billion) over the past six months, even though the country's manufacturing slowed down, the Ministry of Finance said Friday.

"The rapid growth of tax revenue was mostly driven by the economic rebound," the ministry said in a statement posted on its website.

The Chinese economy grew at 10.3 percent in the second quarter, slowing from the blistering 11.9 percent growth in the previous quarter and the 10.7 percent in the final quarter of 2009.

China's import industries surged 52.7 percent during the period compared to the same time last year. Sales of commercial houses increased 38.4 percent compared to last year and auto sales surged a year-on-year 53.3 percent over the past five months.

Personal income tax revenue increased 22 percent in the first half of 2010, compared the to the same time last year. In 2009, the personal income tax rose 6.1 percent to 394.93 billion yuan ($58.29 billion) compared to the previous year. Personal income tax accounts for 6.8 percent of the country's total tax revenue.

"The tax revenues were up so much this year because last year's base was low," the Finance Ministry said.

In 2009, China's tax revenue came to 6.31 trillion yuan ($931.43 billion), up 9.1 percent compared with the year of 2008.

Last week, the China Federation of Logistics & Purchasing released the Purchase Man-agement Index (PMI) for July, which fell to 51.2 from 52.1 in June, the lowest level since March 2009.

A PMI reading above 50 indicates expansion in the manufacturing sector.

"The slowdown seemed concentrated in heavy industry, partly reflecting a government campaign to close inefficient businesses to meet energy-saving goals. This does not necessarily reflect weakening in the underlying economic fundamentals," Bloomberg quoted Wang Qing, chief economist with Morgan Stanley, as saying.

But even as revenues rise, the government is levying more new taxes.

In June, the central government levied a 5 percent resource tax in Northwest China's Xinjiang Uyghur Autonomous Region on coal, oil and natural gas in order to boost the region's economy.

Editor:Xiong Qu |Source: Global Times

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