Tax cuts continue to show negative tax growth for the first eight months

Affected by the policy of reducing taxes and fees and the downward pressure of the economy, the cumulative growth rate of tax revenue in the first eight months of this year showed negative growth for the first time. According to data released by the Ministry of Finance on September 17, in the first eight months of this year, the national general public budget revenue was 13.7 trillion yuan, an increase of 3.2% over the same period last year.

Although the growth rate of general public budget revenue increased by 0.1 percentage points compared with the previous month, tax revenue in January-August dropped by 0.1% to 11.7 trillion yuan, the first negative growth in the year.

Regarding the decline of the growth rate of fiscal revenue, at the 12th meeting of the Standing Committee of the 13th National People's Congress, Liu Kun, Minister of Finance, in his report of the State Council on the budget implementation since this year, said that this was mainly influenced by the policy effect of tax reduction and fee reduction, the increasing downward pressure of the economy and the higher base of the same period last year.

In the first eight months of this year, domestic VAT revenue increased by 4.49 trillion yuan, an increase of 4.7% over the same period last year, and the growth rate fell further, down by 0.7 percentage points over the previous month, due to the overhang of the policy of reducing VAT tax rate last year and the further amplification of the effect of new VAT increase and reduction this year.

In terms of individual taxes, from January to August, the individual tax revenue was 721.2 billion yuan, down 30.1% from the same period last year, and it continued to decrease by about 30%. At the same time, the growth rate of domestic consumption tax, enterprise income tax and other major taxes has also declined to varying degrees. For example, enterprise income tax, the second largest tax after domestic VAT, grew by only 3.6% in the first eight months of this year, a 0.4 percentage point drop annually, and a 9.3 percentage point drop compared with the same period last year. It is mainly affected by the increase of the pre-tax deduction ratio of R&D expenditure, the inclusive tax relief for small and micro enterprises, and the year-on-year decline in corporate profits. However, the growth rate of non-tax revenue, which supports the smooth operation of fiscal revenue, continued to expand. From January to August, non-tax revenue was 1.99 trillion yuan, an increase of 27.3% over the same period last year, and the growth rate expanded for four consecutive months.

During this year's NPC and CPPCC sessions, Premier Li Keqiang of the State Council said that special financial institutions and central enterprises would increase their profits and enter the Treasury to raise funds so as to ensure the sustainable operation of finance. On the other hand, as the state vigorously cleans up the policy of reducing fees such as administrative fees, in non-tax revenue, special income including education fee surcharge and administrative fee revenue are showing a downward trend. Yin Zhongqing, a member of the Standing Committee of the 13th National People's Congress, mentioned that in the past three years, the central government has taken measures to reduce taxes and fees continuously, with more than 800 billion yuan the year before, more than 1300 billion yuan last year and 2 trillion yuan this year. In the long run, tax reduction and fee reduction will surely help to develop the economy, expand financial resources and increase tax revenue. But in the short run, tax cuts and fee cuts will definitely affect fiscal revenue. Financial expenditure remained relatively strong even as income declined. In the first eight months of this year, the national general public budget expenditure was 15306.9 billion yuan, an increase of 8.8% over the same period last year. Although this growth rate is at a low point in the year, it is still higher than the same period last year and the whole year of 2018. Among them, expenditure on education, science and technology, transportation and other fields maintained a relatively high growth rate of 9.2%, 15.2% and 16.1%, respectively. Bai Jingming, deputy president of the Chinese Academy of Financial Sciences, said: "From the publication, the budget implementation in the first half of the year was good, especially the tax reduction and fee reduction achieved tangible results, the fiscal expenditure maintained a relatively rapid growth, and the demand for funds in key areas was better guaranteed. But at the same time, all localities are facing the challenge of increasing budget balance pressure.

Recently, the August fiscal data released in many places show that the growth rate of fiscal revenue in many provinces and cities has slowed down significantly or even declined. Liu Kun had previously said that the central government would take the lead in reducing general expenditure, with an average reduction of 10% in other projects except rigid and key ones. On the basis of strict implementation of the general expenditure reduction of 5% set at the beginning of the year, where conditions permit, we should further increase the reduction, strive to reach more than 10%, and use the saved funds to support key construction and people's livelihood improvement. In addition, in order to alleviate local financial pressure, the central government allocated 7539.9 billion yuan in local transfer payment budget in 2019, an increase of 9%. In budget implementation, the central government has accelerated the progress of transfer payment budget delivery, balanced transfer payment and transfer payment for the poor and old areas have all been delivered to local governments.