China's tax revenue growth hits three-year low

BEIJING - Growth of China's tax revenues logged the slowest pace in three years in the first quarter of 2012 as a result of the country's cooling economy, official data showed Tuesday.

Tax revenues rose 10.3 percent year-on-year to 2.5858 trillion yuan ($410.4 billion) in the first quarter, the Ministry of Finance said in a statement posted on its website.

The growth rate marked the slowest pace in three years, pulling back 22.1 percentage points from the same period last year, the ministry said.

Revenues from major tax items saw slower year-on-year gains. Receipts from value-added tax, consumption tax and turnover tax rose 5.4 percent, 15.1 percent and 7.6 percent, respectively, down 17.8 percentage points, 6.4 percentage points and 18.7 percentage points from a year earlier, the statement said.

Revenues from corporate income tax increased 20.5 percent during the January-March period, while those from personal income tax dropped 6.2 percent year-on-year, slumping 43.2 percentage points on the same period last year.

The easing pace came as China's industrial value-added output and profits, key measures of industrial performances, both saw slower growth in the first two months as the country's economy cooled.

China's economy expanded 8.1 percent year-on-year in the first quarter, marking the fifth consecutive quarter of slowing growth, according to the National Bureau of Statistics.

During the January-February period, the country's industrial value-added output shed 2.7 percentage points to grow 11.4 percent while industrial profits decreased 5.2 percent year-on-year, down 39.5 percentage points on last year.

Meanwhile, property-related tax income retreated significantly in the first three months. Revenues from deed tax and sales tax declined 13.6 percent and 17.5 percent, respectively, shedding 41.1 percentage points and 45.8 percentage points from the same period of last year.

The shrinking tax in the sector is largely the outcome of sagging sales due to the government's persistent control efforts. In the first two months, sales value of commercial housing dropped 20.9 percent year-on-year, according to the statement.

The ministry also attributed the slower growth to the country's cooling inflation and tax-reduction policies.

Growth of the country's Producer Price Index, a major gauge of inflation at wholesale level, pulled back 6.5 percentage points in the first two months, while that of the consumer price index, a main measure of inflation, retreated 1 percentage points, eroding tax revenue that was computed with the current prices.

Also, the government's moves to reduce tax burdens and deepen structural reform, including by raising the threshold of income tax, tariff reductions on certain imported products and favorable tax policies for small and micro-sized enterprises, have combined to drag down the tax revenues, the ministry said.