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January 24, 2017

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Spending outpaces revenue

CHINA’S fiscal revenue grew slower last year due to tax cut measures and downward pressure on the economy while growth in fiscal spending continued to outpace revenue, data from the Ministry of Finance showed yesterday.

Fiscal revenue rose 4.5 percent year on year to 15.96 trillion yuan (US$2.3 trillion) in 2016, the ministry said. The growth, however, was nearly half of the 8.4 percent annual increase in 2015.

The slower growth was in line with the ministry’s expectation as it said in October that China would face a grim situation over fiscal revenue increases in the last quarter of the year, due to continued pressure on the economy.

The ministry attributed the slower revenue growth to tax cuts, impact from the economic slowdown and a high base in 2015.

China’s shift from a business tax system to value-added tax resulted in a cut of 500 billion yuan in tax income last year as the reform was expanded in May to cover all industries, the State Administration of Taxation estimated in December.

China’s fiscal spending grew 6.4 percent year on year to 18.78 trillion yuan last year.


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