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January 27, 2010

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Mixed fortunes in fiscal incomes

SHANGHAI faces uncertainties for income from the real estate and auto sectors to grow this year while that in the modern services industries is expected to rise rapidly, the local finance authority said.

The modern services industries, which include finance and trade, are expected to see revenue climb rapidly this year as they ride on the city's momentum toward its goal of a global financial hub and also on its hosting of the World Expo, the Shanghai Finance Bureau said in a release to local lawmakers yesterday.

The manufacturing industries are also set to see a rebound in their income this year as external demand is picking up and on rising domestic consumption, the bureau said.

But the government's fiscal income from the real estate and auto sectors face uncertainties this year due to a high base in 2009 and recent policies issued to guide healthy development of the market.

China has already implemented measures to curb high-flying property prices, including stricter policies on tax and mortgage loans. Home buyers must pay at least a 40 percent down payment on home mortgages.

Against this backdrop, Shanghai expects a tight balance between fiscal income and expenditure this year.

"On one hand, Shanghai's fiscal income is expected to grow at a stable rate," the bureau said. "On the other hand, the city faces pressure on spending as more money will be channeled to improve the living and economic structure for the general public."

Shanghai's fiscal income is expected to grow by 8 percent to 274.3 billion yuan (US$40.2 billion) in 2010. It grew 7.7 percent from a year ago to 254 billion yuan in 2009, better than the year's target of 6 percent growth.

Real estate tax and deed tax at the city level rose above targets set last year on rising property deals. Taxes on individual income and corporate income fell short of the 2009 targets due to a slowdown in the economy.


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