BEIJING (Reuters) - China’s fiscal revenues jumped by a quarter in 2011 to a record 10.37 trillion yuan, China’s Ministry of Finance said on Friday, leaving Beijing with plenty of financial firepower to help manage an economic soft-landing.
Although Chinese governments, including Beijing and local governments, rushed to spend almost 2 trillion yuan in December alone, China’s full-year fiscal deficit of 519 billion still fell short of the 900 billion yuan that had been penciled into the budget in March.
The figures are subject to revision, but if the numbers hold, the official fiscal deficit will fall to 1.1 percent of China’s gross domestic product of $7.47 trillion, an enviable level when compared with the world’s other major economies that are saddled with heavy government debt.
The finance ministry said the strong 24.8 percent growth of fiscal revenues in 2011 — much higher than the budgeted 8 percent — reflected China’s rapid economic growth and handsome corporate profits.
“Some local government revenues that had originally been excluded from the budget were included in 2011, which amounted to an increase of about 250 billion yuan...and pushed up nationwide fiscal revenue growth by three percentage points,” the ministry said in a statement on its website (www.mof.gov.cn).
For many years, China’s fiscal revenues have been rising faster than the overall economic growth, which was 9.2 percent last year, and the growth rate of household income, offering the government a growing share of the national wealth.
Corporate income taxes rose 30.5 percent in 2011, while value-added taxes and import duties also rose quickly.
Personal income tax revenues jumped 25 percent for the full year of 2011, but the ministry noted that personal income tax revenues in the last quarter fell 5.5 percent as China lifted the personal income tax threshold starting from Sept 1.
Beijing is trumpeting the so-called “structural tax cut” policies for 2012, or tax cuts for selective sectors such as small household businesses and vegetable vendors.
But these tax cuts were far from being sufficient, independent economists said. Andy Xie, an economist, argued that China should cut taxes by 1 trillion yuan.
China’s fiscal expenditures in 2011 were 10.89 trillion yuan, an increase of 21.2 percent.
According to the rough breakdown from the ministry, government spending on education jumped 28.4 percent, healthcare was up 32.5 percent and transport up 36.1 percent.
Government spending on affordable housing surged 60.8 percent in 2011 as Beijing started a nationwide campaign to build up millions of new government-subsidised apartments.
Spending on “energy efficiency and environment protection” by the world’s largest emitter of greenhouse gas rose only 7.2 percent.
China’s finance ministry said the numbers were all subject to revision. China will finalises its 2011 fiscal figures in March when the finance minister delivers a report to the country’s largely ceremonial parliamentary gatherings.
Editing by Nick Edwards and Ken Wills