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China scores hefty increase in '99 tax revenues

BEIJING: China's top tax collector said on Tuesday revenues rose 13.4 percent year-on-year in 1999, buoyed by solid economic preformance, improved collection and a "heavy blow to smuggling" that helped customs receipts soar.

Jin Renqing, director of the State Administration of Taxation, told reporters a drive last year to close tax loopholes, collect arrears and curb rampant smuggling brought in an above-target 1.0312 trillion yuan ($124.5 billion) in taxes .

The two-year-old war on smuggling of everything from crude oil to cars, which forced imports through legal channels, boosted customs revenue on imports 78 percent over 1998 to 103.9 billion yuan, he told a news conference.

Revenues taken in by the central government, which exclude the stamp tax on share trading, interest income tax and customs duties, rose 14.9 percent year-on-year to 578.5 billion yuan.

The filling of Beijing's coffers marks a significant gain at a time when billions of yuan are needed to stimulate the economy and build a social security system to ease the painful transition to a market economy after decades of socialism.

"The growth in taxes is quite significant if you consider it was almost double the rate of growth of the economy," said a Western diplomat.

The government said last month that China's gross domestic product grew a provisional 7.1 percent to 8.319 trillion yuan in 1999, which means tax revenues amounted to 12 percent of GDP -- still low by international standards.

The government's goal was to "collect nothing less or more than all the taxes stipulated by law", Jin said. He said his agency had recovered 20 billion yuan owed taxes last year.

Jin vowed further strengthening of tax collection efforts and a battle against evasion, deceit and violence resistance against the taxman that he estimated had caused 20 deaths and several hundred injuries in the line of duty since 1993.

The senior tax official, indicating he expected difficulties in repeating last year's performance, cited the provisional budget for 2000 as projecting total tax growth of eight percent.

"Forecasts and projections show there is little room for import duties and stamp tax revenues to increase," Jin said.

Revenues from the stamp tax on share trading rose a year-on-year 19.4 percent to 24.5 billion yuan in 1999, data showed.

Jin said state-owned firms provided almost half the revenues, private business and self-employed contributed 8.5 percent and collective enterprises paid 14 percent.

Shareholder and joint-stock companies provided 16 percent and foreign-invested firms accounted for 16 percent.

China's forthcoming entry into the World Trade Organisation (WTO), which would force Beijing to slash import tariffs and rethink other preferential tax policies, posed "new problems and difficulties in tax administration", Jin said.

"This is a sensitive question which requires a step-by-step approach," he said without elaborating on how Beijing would ease disparities in the tax treatment of foreign and local firms.

Although only in its infancy in China, e-commerce likewise posed new challenges to tax authorities, Jin said.

He said his agency was listening to "different points of view" and planned to compare notes with foreign counterparts on e-commerce tax policy.

"We are still unfamiliar with all the issues, but believe there still is time," he said.-Reuters