Hot property market fires up tax revenue

Growth in tax revenue has been accelerating over recent quarters as a reflection of the economic recovery, with improved company performance and a thawing property market spurring the advance.

Nationwide, tax revenue was 8.44 trillion yuan ($1.39 trillion) in the first three quarters, up 9 percent with the growth rate and accelerating 0.4 percentage point from the same period last year, the Ministry of Finance said in an online statement on Monday.

Tax revenue growth has been rising on a quarterly basis from the 6 percent growth recorded in the first three months and 7.9 percent in the first half. The ministry said 77.3 percent of the annual target was accomplished by the end of September.

The development was in line with the latest statistical data of the world's second-largest economy, showing its growth had sped up to 7.8 percent in the third quarter from 7.5 percent the previous one.

"The obvious uptick in the third quarter's fiscal revenue was due to economic recovery and the improved trade situation," said Bai Jingming, deputy director of the Research Institute for Fiscal Science under the Finance Ministry.

In September, the corporate income tax grew nearly 50 percent from a year before, which, according to Bao, came from increased revenue of companies on the back of a reviving economy.

According to the Finance Ministry, profits of industrial companies have grown 12.8 percent year-on-year in the first eight months.

Power companies and property developers were seeing rapid growth in their revenue and corporate tax payment, due to increased power consumption during the summer heat wave, as well as substantial property sales.

Developers contributed to half the increment in the corporate tax, the result of a 30 percent yearly increase in property sales, the finance ministry said.

Companies' improved performances stemmed partly from tax reforms that eased their tax burden, Bai said. Finance Ministry data showed business taxes dropped by two-thirds for the transportation sector on average and by nearly one-third for commercial service companies after a reform to replace business tax with value-added tax to avoid duplicate taxation was expanded nationwide in August.

Measures launched earlier this year to curb housing price hikes by heavily taxing property transactions also helped lift tax revenue.

Propelled by strong demand in the housing market and new levies on property sales, growth in business sales tax and contract tax from property transactions accelerated 37.6 percentage points and 40.4 percentage points respectively in the first nine months from the same period last year.

During the same period, growth in personal income tax picked up by 10.8 percent, accelerating by 19.2 percentage points compared with last year's decline following efforts to cut the payroll tax. Levies on property transfer income, which grew 35.2 percent, played a key role in driving up the revenue.

Meanwhile, revenue from tariffs and housing taxes levied on property owners experienced a decline.

Qiu Xiaoxiong, deputy head of the State Administration of Taxation, called at a recent conference for further strengthening of tax collection "to guarantee a stable growth in tax revenue."