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Tax revenue up but growth slows

CHINA'S tax revenue climbed 18.8 percent year-on-year to 5.42 trillion yuan (US$792.68 billion) in 2008, the Ministry of Finance said yesterday.

The growth rate was 14.9 percentage points lower than 2007.

Value-added, corporate income and business tax revenues rose 16.3 percent, 27.3 percent and 15.9 percent. These three types of tax contributed about 70 percent of the increased revenue of about 859 billion yuan, the ministry said.

Tax revenues weakened in the second half of 2008, with a decline in the fourth quarter, it added. They were down 0.5 percent, 11 percent and 12 percent year-on-year for October, November and December, respectively.

The ministry attributed the lower growth rate in the second half to the slowing economy and government policies that reduced taxation to boost the economy.

Affected by the global financial crisis, China's GDP cooled to its slowest pace in seven years - 9 percent in 2008.

Industrial output and corporate profits all plunged, and with them, tax revenues, the ministry said. In response, the government announced a series of measures aimed at preserving economic growth, such as increasing export rebates for commodities and scrapping stamp tax on stock purchases.

The country raised export rebates three times in the second half, for things such as textiles and garments by 2 percentage points to 13 percent from August 1, according to customs figures.

The government cut the share trading stamp tax from 0.3 percent to 0.1 percent last April and scrapped the stamp tax on stock purchases in September.

Stamp tax revenue was 97.92 billion yuan in 2008, down 51.2 percent, bringing the overall growth rate of tax revenue down by about 2.3 percentage points.


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