Growth in fiscal revenue at all levels of government continued rising in July, but realizing the full-year target will be an arduous task amid an economic slowdown and pending tax cuts, the Ministry of Finance said on Tuesday.

Last month, revenue of governments at all levels was 1.18 trillion yuan ($193 billion), up 11 percent year-on-year, according to a statement on the website of the Ministry of Finance.

Cumulative fiscal revenue for the first seven months of 2013 expanded 8 percent, accelerating from 7.5 percent growth in the first six months, to 8.04 trillion yuan.

However, the growth rate was 3.6 percentage points slower than in the comparable year-earlier period.

Income for the central government rose 8.8 percent in July alone, while that of local governments was 13.5 percent higher that month.

In June, nationwide fiscal revenue grew 12.1 percent. In the first five months of this year, the figure was slightly more than 6 percent.

Assuming steady economic growth in the coming months, "the cumulative growth rate of fiscal revenue at the central government level would increase gradually," according to the ministry.

"However, influenced by factors such as slowing industrial output, a declining producer price index and more tax cuts during the expansion of the value-added tax pilot program, it's still a very difficult task to realize the full-year target," the statement said. It called for more effective tax-collection efforts.

Despite signs of improvement in the central government's fiscal revenue picture, the growth rate in the first seven months was 3.6 percent - still 4.4 percentage points below the annual target of 7 percent.

Local governments saw faster fiscal income growth, the result of a 43 percent increase in property transaction tax revenues, as well as 20-percent growth in land value-added tax and car purchase tax.

However, local authorities are also facing unprecedented pressure involving debt repayments and rising expenditures to improve living standards. Overall fiscal expenditure picked up 8.9 percent in the first seven months, with that of the central government growing 4.4 percent and the local government level rising 9.8 percent.

An earlier research report has said local governments face 2 trillion yuan in debt repayments this year.

Consumption tax revenue shrank 1.8 percent due to lower levies on cigarettes, alcoholic beverages and petroleum products.

Bai Jingming, deputy director of the Research Institute for Fiscal Science under the Finance Ministry, said second-half fiscal revenue would outstrip that of the first half, because of an expansion in the service sector and an improving external economic environment.

But he also noted the pressure faced by local financial authorities, such as from tax cuts.

"Tax income in central and western regions is generally growing faster, but the momentum will slow when VAT reform is extended to these regions."

On Aug 1, a pilot program to replace the business tax with VAT in nine industries expanded to the entire country. This reform is expected to save enterprises about 120 billion yuan in taxes this year.

weitian@chinadaily.com.cn

(China Daily USA 08/14/2013 page15)