China’s local fiscal revenue growth generally picked up in the first quarter
International Business News – Recently, around the first quarter of the financial revenue and expenditure “book”, the majority of provinces to achieve positive revenue growth. Among them, Henan, Ningxia revenue growth rate of more than 10%, Sichuan, Gansu more than 9%, Jiangsu, Zhejiang, Anhui, Liaoning, etc. more than 7%. Local spending generally maintain a higher intensity, Sichuan, Hubei, Gansu and other places spending growth rate of even more than 15%.
Ministry of Finance statistics show that in the first quarter, the local general public budget revenue growth of 5%, the increase in revenue around the general recovery trend. Eastern, central, western and northeastern regions revenue growth of 4.3%, 5.8%, 5.3%, 9%, the cumulative increase of 2.9, 2.8, 2.9, 6.1 percentage points, respectively, than January to February rebound. Experts generally believe that the nationwide revenue growth trend in the first quarter was further established and consolidated.
“The 5% growth rate of local general public budget revenue at the local level in the first quarter is in line with the economic fundamentals that are stabilizing and rebounding, showing the momentum of economic rebound. At the same time, the faster growth rate of 5% also reflects the determination and action of localities to increase the organization of fiscal revenue.” Feng Qiaobin, deputy director of the Macroeconomic Research Department of the Development Research Center of the State Council, said that in terms of tax revenue, VAT and corporate income tax grew faster in the first quarter in many places, reflecting the accelerated recovery of market vitality and the positive development of enterprises.
As the number one tax in China, value-added tax (VAT) performed prominently in the financial “books” of various regions in the first quarter. For example, Jiangsu’s VAT revenue in the first quarter was 126 billion yuan, up 32.8%, while Yunnan’s VAT revenue in the first quarter was 16.62 billion yuan, up 14.3%. “Local VAT generally maintained the growth trend, on the one hand reflects the production and operation conditions of enterprises gradually improved, on the other hand also reflects the effect of last year’s delayed VAT revenue of small, medium and micro enterprises in the manufacturing industry.” Wang Dehua, a researcher at the Academy of Financial and Strategic Studies of the Chinese Academy of Social Sciences, said.
In contrast, the growth rate of corporate income tax in some places in the first quarter was low or even negative. For example, Hubei’s corporate income tax (local share) in the first quarter was 11 billion yuan, down 13.1% year-on-year. Shaanxi’s corporate income tax fell 4.05% in the first quarter. “This is mainly due to the impact of the epidemic in the fourth quarter of last year, poor corporate profits led to a decline in prepaid income.” Wang Dehua analyzed.
Experts generally agree that although the fiscal revenue situation improved in the first quarter, it still faces pressure and challenges. “In some places, in addition to the growth of value-added tax and corporate income tax, other tax revenues grew slowly or even declined, and non-tax revenues grew significantly faster than tax revenues, which also reflects that the foundation of economic recovery is not yet solid, and continued efforts are needed to stabilize the economy in terms of stable growth.” Feng Qiaobin said.
Bai Yanfeng, a professor at the School of Finance and Taxation of Central University of Finance and Economics, said, “As the economy continues to recover and the secondary real estate market gradually picks up and a new model for the development of the real estate industry gradually takes shape, the sustainable operation of local finances is expected to be improved.”