Economic Development Laid a Good Foundation for
Tax Growth Greater Efforts Must Be Exerted
to Accomplish the Task for the New Year

State Administration of Taxation

January 11,2000

In 1999,the total tax revenue was RMB £¤1031.2 billion,13.4% up from 1998. The increased amount reached RMB £¤122 billion.Among the total tax revenue, the central revenue was RMB £¤578.5 billion ,14.9% up, with the increased amount reaching  RMB £¤75.2 billion. The local tax revenue was RMB £¤452.7 billion.It was 11.5% more than the previous year.The increased amount reached RMB £¤45.8 billion.Also among the total sum,revenue from domestic VAT and Consumption Tax reached RMB £¤484.6 billion. It increased by 6.4%. The increased amount reached RMB £¤29 billion, which outdid the original plan as well.

The growth was brought about by the following factors.

First, steady economic development in 1999 laid a solid foundation for tax growth. In 1999,  a package of macro control and adjustment policies were adopted, including expanding investment, stimulating domestic demand, adjusting economic structure and deepening reform etc.. The implementation of these policies incurred positive changes of the Chinese economy. Industrial production grew steadily.Domestic market sales remained stable. The falling tendency of export was curbed and began to pick up.The national economy on the whole maintained a momentum of steady growth.Economic quality and enterprise efficiency were further improved. Statistic report shows that the GDP in 1999 was RMB £¤8319 billion. According to the comparable price, it grew by 7.1%.Economic development has become the  most important impetus for the growth of revenue sources.

In 1999, the government continued to use tax policies as a means to adjust and control the economy. A package of polices were adopted like increasing tax refunds to exporters, reinstating personal income tax on depository interest of residents, cutting regulation tax on fixed asset investment orientation by half etc..Tax became a powerful policy instrument to tackle monetary deflation.This helped to create a favorable environment for economic development and revenue resource increase. In 1999, the total tax refunds entitled to exporters was RMB £¤62.8% billion.It grew by 43.6% .The increased amount of refunds reached RMB £¤19.1 billion.  This had a positive effect upon the picking-up and the growth of export and foreign trade.

Second, In 1999,heavy blow on smuggling resulted very positively. In addition,domestic enterprises' demand for import grew consequent to the implementation of policies related to the boosting of domestic demand .All these stimulated remarkably the growth of tax collected by the customs administrations on behalf of the tax authorities upon imported products .The total tax revenue mobilized in this respect reached RMB £¤103.9 billion, which was 78% more than the previous year.Another factor leading to tax growth is   the increase of stamp duties upon securities transaction resulted form the booming of securities transactions. The total revenue from stamp duties upon securities transactions reached RMB £¤24.5 billion, which was 19.4% more than the previous year.The total growth from the above two items reached RMB£¤ 49.5 billion.

Third, tax collection and administration was strengthened.The quality and efficiency of tax collection and administration was improved,which ensured tax growth.Tax administrations at different levels strictly abided by the guidelines of " strengthening tax collecting and administration,stopping tax loopholes,punishing corruption and collecting arrears and the unpaid tax".The upturn of arrears and tax unpaid was curbed. The amount of unpaid tax and arrears collected went beyond RMB £¤10 billion.At the same time tax audit was reinforced.Both routine and special audits were conducted. Tentative analysis shows that in 1999 the strengthening of audit and tax collection and administration incurred an increase of RMB £¤16.5 billion.

Still another factor that conduced to tax growth in 1999 was the cooperation and coordination between tax administration and other relevant departments  such as law-implementation departments, industrial and commercial administrations,customs offices,banking sector, foreign trade etc..Their cooperation conduced to the collection of arrears and unpaid tax; the imposition of tax upon unregistered taxpayers; the assessment and examination of tax refunding; the campaign against evasion,deceit and violence;the maintenance of the right order for taxation and the collection of all the taxes stipulated in the law.

According to the tentative plan of the national budget (waiting to be approved by the National People's Congress ) tax growth should reach 8% in the year 2000, among which revenue from VAT and Consumption Tax is expect to grow by 9.7%,  the biggest growth in recent years and therefore quite difficult to accomplish. Tax administrations throughout China must continue sticking to the guidelines of "strengthening tax collection and administration, stopping tax loopholes, punishing corruption and collecting arrears and the unpaid tax". All the tax staff are required to work hard, to stop loopholes , to collect all the taxes stipulated in the law and to make sure that all the tax is  turned into national treasury so as to contribute more to China's reform, and construction.