CHINA’S fiscal revenue fell 2.8% in the first six months of this year, mainly because of a high base a year earlier as well as tax cuts and deferral policies.

General public budget revenue was 11.59 trillion yuan (US$1.59 trillion) in the first half, according to figures released by the Ministry of Finance on Monday. Excluding the impact of tax cuts and deferrals, fiscal revenue rose about 1.5%, the ministry noted.

Regarding major tax categories, domestic value-added tax revenue fell 5.6%, corporate income tax dropped 5.5%, and personal income tax dropped 5.7%. In comparison, the domestic consumption tax rose 6.8% thanks to the consumption of refined oil, cigarettes, and alcohol.

Affected by the policy of halving the tax rate, the stamp duty on securities transactions plunged 54% in the first half from a year ago. Due to the sluggish real estate market, revenue from transferring State-owned land use rights fell 18.3% to 1.53 trillion yuan.

The national general public budget expenditure climbed 2% to 13.66 trillion yuan, outpacing the revenue growth, indicating that the proactive fiscal policy is being implemented.

The economic data for the first half reflects an insufficiently solid foundation for post-pandemic recovery, said Luo Zhiheng, chief economist at Yuekai Securities, as quoted by yicai.com Yicai.

More proactive fiscal policies are needed for consolidation of the economy, he added.

It is necessary to issue additional government bonds to compensate for the shortfall in expenditure caused by low growth in land transfer revenue and tax income this year, further leveraging the counter-cyclical adjustment role of fiscal policy, Luo noted.

The net financing of government bonds will likely increase by around 2 trillion yuan to 5.6 trillion yuan in the second half of this year from the first, according to institutional estimates.

(SD-Agencies)