This photo taken on Sept 2, 2024 shows the skyline of the central business district (CBD) at dusk in Beijing. [Photo/Xinhua]
China's tax revenue growth returned to positive territory in October for the first time this year, suggesting that the country's economic activity is picking up pace and gaining stronger momentum, analysts said.
The incremental policy package introduced recently by the world's second-largest economy, which includes measures to revitalize the capital market and stabilize the real estate sector, has played a pivotal role in driving positive changes in the country's tax revenue, they added.
According to the latest data released by the Ministry of Finance, China's general public budget revenue, which is the sum total of tax and nontax revenues, grew 5.5 percent year-on-year in October, marking a continued rebound in growth momentum.
In particular, the data showed that tax revenue recorded a year-on-year increase of 1.8 percent in October, the first positive growth so far this year, pointing to encouraging signs of improvement.
Yang Zhiyong, president of the Chinese Academy of Fiscal Sciences, said the return to positive territory in terms of tax revenue is a clear indication that economic recovery is gaining traction. This provides a solid basis for the continuation of the current growth trajectory in the coming period, Yang said.
Meanwhile, the recent policy package, which has introduced wide-ranging monetary, fiscal property and capital market measures, has been crucial in bolstering business confidence and economic activity, ultimately translating into increased tax collection, Yang added.
According to the Ministry of Finance, one key development was the significant increase in the securities transaction stamp duty, which surged 1.53 times year-on-year last month, driven by a notable improvement in market sentiment and a substantial expansion in stock trading volume.
The year-on-year decline in value-added tax narrowed to 1.2 percent in October, a significant improvement over the minus 5.6 percent recorded in the first nine months of the year. The ministry added that personal income tax registered 5.5 percent year-on-year growth, marking the first positive increase since April.
An analysis by Galaxy Securities shows that the changes observed in last month's tax revenue data are broadly consistent with the optimizing supply-demand structure of the economy.
The increase in consumption tax and real estate tax revenues indicates that the demand side of the economy is steadily improving. Moreover, the moderation in the decline of corporate income tax and personal income tax is primarily attributed to the improvement in corporate profitability and cash flow, the institution said.
In addition to the developments in the tax revenue performance, the country's nontax revenue has also exhibited a strong surge.
Nontax revenue includes a wide range of sources such as administrative fees, fines and confiscations, income from the use of State-owned assets, and returns on State-owned capital.
The market is closely monitoring the growth in nontax revenue, because of the potential risks it poses to the business climate and market sentiment.
China's nontax revenue reached 3.42 trillion yuan ($472 billion) in the first 10 months of this year, up 15.3 percent year-on-year. The figure accounted for around 18.5 percent of the total public budget revenue during that period, compared with the 13.5 percent recorded in the first three quarters.
In October alone, the nontax revenue growth rate was 39.6 percent year-on-year, based on calculations made by GF Securities.
China's nontax revenue growth accelerated significantly in the first 10 months of the year, substantially outpacing the 1.8 percent annual target set at the beginning of the year, according to the analysis by Galaxy Securities.
The analysis showed that current nontax revenue has already exceeded the budgeted amount by around 400 billion yuan. Extrapolating from the total nontax revenue of 3.65 trillion yuan recorded last year, the full-year surplus in nontax revenue in 2024 could potentially reach close to 500 billion yuan.
At a news conference held in late October, the Ministry of Finance said the government has been proactive in utilizing various channels to activate and maximize the value of State-owned resources and assets, which has been a key driver behind the robust growth in nontax revenue in the first three quarters.
The ministry pledged to closely monitor the changes in nontax revenue and firmly refrain from imposing any excessive fees or charges, in order to further alleviate the burden on businesses.
