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China records $173.7b fiscal surplus in H1

(Xinhua)
Updated: 2008-08-08 10:15

BEIJING - China's fiscal surplus hit 1.19 trillion yuan ($173.7 billion) in the first half, according to Ministry of Finance (MOF) figures released on Thursday.

The statistics showed the country's budget revenue totaled 3.48 trillion yuan from January to June, up 33.27 percent compared with the same period last year; budget expenditure stood at 2.28 trillion yuan, up 59.52 percent year on year.

Related readings:  Fiscal surplus to support economic growth  China's fiscal revenue up 29.4% in first four months  China mulls fiscal policy on medical cost of quake injured  China's fiscal revenue hits record high in 2007

The increase of fiscal revenue was attributed to rising corporate income tax and import turnover tax, economic experts said.

Corporate income tax contributed to the state revenue, 791.3 billion yuan in the first half, up 41.5 percent. This was due to enterprises pre-paying income tax according to last year's strong profits, said Ma Haitao, a professor at the Beijing-based Central University of Finance and Economics.

"Rising imports also drove up corporate income tax," said Zhu Qing, a Renmin University of China professor. "Because of the appreciation of the renminbi, the first half saw imports valued at US$567.6 billion, up 30.6 percent year on year."

Ma added turnover tax, the major part of taxation, experienced an increase from January to June because of the rising price. It added to the climbing fiscal revenue.

In the first half, domestic consumption tax reached 134.6 billion yuan, up 18.4 percent, and sales tax was 405.1 billion yuan, up 25.6 percent year on year.

In response to the fiscal surplus, experts proposed to adopt a tax reduction policy to maintain the development of both the macro-economy and enterprises.

However, Chinese Academy of Social Sciences analyst Yang Zhiyong said in the second half fiscal expenditure was expected to increase as a large amount of capital would go to post-quake reconstruction, education and medical care among others.

Ma agreed with Yang, saying the country would face fiscal stress in the following months. To care for people's well being and stimulate consumption would need funds, so chances of a tax cut were slim.