Business / Economy

Slowing economy crimps China's fiscal revenue

By Zheng Yangpeng (China Daily) Updated: 2015-01-31 09:02

Slowing economy crimps China's fiscal revenue

A worker checks a bridge reinforcement at a construction site of the Yiyang-Loudi Highway in Central China's Hunan province. China's GDP growth slowed to 7.4 percent in 2014, the lowest reading since 1990. [Li Aiming / China Daily]

Broad fiscal revenue grew 7.2 percent last year, the slowest pace since 1991, underscoring both the pain of the economic slowdown and the growing tension between income and expenditure.

General fiscal revenue, including taxes and fines, rose 8.6 percent to 14 trillion yuan ($2.25 trillion), the Ministry of Finance said on Friday. That was the first single-digit expansion in 23 years.

Revenue grew 10.2 percent in 2013 and 12.9 percent in 2012 .

Special-purpose governmental funds, a separate income category, grew a feeble 3.5 percent to 5.4 trillion yuan. That compared with the 39.2 percent rise in 2013.

Land sale revenue, which usually accounts for about three-quarters of the governmental funds, grew 3.2 percent. A year earlier, revenue surged 44.6 percent amid a boom in the property market.

GDP growth slowed to 7.4 percent in 2014, the lowest reading since 1990. Behind the slowdown was the deceleration in fixed-asset investment, primarily real estate investment.

The property downturn affected an array of revenues in addition to land sales.

Property transaction-related taxes, such as the business tax on property sales, grew 4 percent, down from 33.6 percent in 2013.

Land sale and property transaction-related taxes are the financial lifeblood of local governments.

The ministry attributed the weak revenue growth to setbacks in industrial output, investment and consumption, which weighed on major tax items, the fall in factory-gate price, and the housing sale.

The dire tax figures raise questions about the government's ability to maintain an accommodative fiscal policy, said experts. Failure to do that could add further pressure on the country's overall growth prospects this year.

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