China's Tax Revenues Fall to 3-yr Low in Q1 As Economy Cools

China's tax revenues logged their slowest pace of growth in 3 years in the first quarter of 2012, as a result of the country's cooling economy.

Tax revenues rose 10.3 percent year-on-year to 2.5858 trillion yuan ($410.4 billion) in the first quarter, the Ministry of Finance said in a statement on April 24, 2012.

That was the slowest pace of expansion in 3 years, pulling back 22.1 percentage points from the same period last year, the ministry said.

Revenues from major tax items saw slower year-on-year gains. Receipts from value-added tax, consumption tax and turnover tax rose 5.4 percent, 15.1 percent and 7.6 percent, respectively, down 17.8 percentage points, 6.4 percentage points and 18.7 percentage points from a year earlier, the statement said.

The significant decline in value-added tax was due to slower industrial added value growth and lower price levels which narrowed the tax base of value-added tax, according to the China Business News.

Shrinking property sales contributed most to the decrease in turnover tax, the newspaper said. In the first 2 months of this year, property sales across the whole nation fell 20.9 percent year-on-year.

Revenues from corporate income tax increased 20.5 percent during the January-March period, while those from personal income tax dropped 6.2 percent year-on-year, slumping 43.2 percentage points on the same period last year.

Yang Zhiyong, a researcher at the Institute of Finance and Trade Economics with the Chinese Academy of Social Sciences, told the paper that value-added tax and turnover tax are closely attached to domestic economic activities and the declines in both tax items indicate that it is not necessary for the central government to continue to tighten macro-controls in the short term.

China's economy expanded 8.1 percent year-on-year in Q1, marking the fifth consecutive quarter of slowing growth, according to the National Bureau of Statistics.