Tax revenue to maintain growth momentum
By Xu Dashan (China Daily)
Updated: 2004-12-21 01:55

China's tax revenue, which grew a year-on-year 27.1 per cent during the first 10 months of this year, will continue to grow at a fast rate next year, experts said.

Ni Hongri, a senior researcher with the State Council Development Research Centre, said the country's tax revenue is capable of achieving a fast growth rate.

"The country's economy will continue to grow at a fast rate, while the consumer price index will also remain at a higher level," she said.

She explained tax revenue growth was largely decided by economic growth and the consumer prices situation.

China's economy grew 9.5 per cent and its consumer price index rose 4.1 per cent during the first three quarters of this year. Tax revenue grew a year-on-year 26.3 per cent.

"The Chinese economy is expected to grow between 8.5 per cent and 9.2 per cent, and the consumer price index to grow less than 5 per cent next year," Ni said.

The country's economic development will become stable, she said.

The stable economic development would lay a solid foundation for the country's tax revenue growth, she said.

The government would also take a series of measures to beef up tax collection to increase tax revenue, she said.

"The country's tax revenue is likely to grow about 20 per cent next year," she said.

Gao Peiyong, a senior economist with the Chinese Academy of Social Sciences, agreed the tax revenue would continue to grow at a fast rate.

But he pointed out there were also factors which would result in a reduction in tax revenue.

"The government plans to steadily push forward the tax system reform," he said.

Premier Wen Jiabao said in March this year the government would cancel the agriculture tax within three to five years.

"The government is likely to speed up that process next year," Gao said.

This means the government would reduce more of the tax rate or completely cancel the tax, he said.

The government is also expected to spread trial reform of the value-added tax system next year, he said.

The reform, which allows companies in the old industrial bases of Northeast China to claim tax deductions when buying new machinery equipments, will expand, he said.

Zhang Peisen, a senior researcher with the Taxation Research Institute of the State Administration of Taxation, said the country's macro-control measures would also continue to have an impact on tax revenue.

The government has taken a raft of measures since the second half of last year to try to cool down the economy.

The measures include raising bank reserve requirements three times and curbing unwanted fixed asset investment projects.

"The measures have had a great impact on fixed asset investment and industrial output, which have a close relation with tax revenue growth," Zhang said.

Figures from the State Administration of Taxation indicate that tax revenue grew a year-on-year 25.8 per cent in the third quarter of this year, slowing from the 26.9 per cent growth in the second quarter.

However, Zhang said the macro-control measures would make the country's economy healthier.

A healthy economy would fuel the tax revenue to grow at a healthy rate.

The country's tax revenue would grow more than 25 per cent next year, he said.

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