Understanding the fiscal data for the first seven months in one article: Revenue is sluggish, what supports subsequent growth
2024-08-26
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Fiscal revenue growth has continued to be sluggish since the beginning of this year.
On August 26, the Ministry of Finance announced the fiscal revenue and expenditure situation in July this year. In the first seven months of this year, the national general public budget revenue was 13,566.3 billion yuan, a year-on-year decrease of 2.6%, similar to the growth rate in the first half of the year. The national government fund budget revenue was 2,329.5 billion yuan, a year-on-year decrease of 18.5%, a slightly larger decline than in the first half of the year.
Unraveling the mystery of declining fiscal revenue
From the perspective of national general public budget revenue, this is related to the influence of special factors and the slowdown in economic growth.
The Ministry of Finance explained that the national general public budget revenue declined in the first seven months of this year, affected by special factors such as the tax deferral for small and medium-sized enterprises in the manufacturing industry in 2022, which raised the base in 2023, and the tax and fee reduction policies introduced in mid-2023. Excluding this special factor, the national revenue in the first seven months increased by about 1.2% on a comparable basis.
The national general public budget revenue is composed of tax revenue and non-tax revenue. According to the Ministry of Finance, in the first seven months of this year, the national tax revenue was 11,124 billion yuan, a year-on-year decrease of 5.4%.
Luo Zhiheng, chief economist of Guangdong Securities, told Caixin that the slowdown in tax revenue growth is not only due to the above-mentioned special factors, but also to the current slowdown in economic growth. Economic growth is the basis for tax growth. If economic growth slows, tax growth will be restricted. In addition, the downward trend in commodity prices and the continued decline in prices of some energy and mineral products have dragged down tax growth.
In terms of specific tax types, in the first seven months of this year, the largest tax type, domestic value-added tax (4.1 trillion yuan), fell by 5.2% year-on-year, mainly due to the high base of the same period last year and the tail-end reduction in policy revenue. The second largest tax type, corporate income tax (3 trillion yuan), fell by 5.4% year-on-year, which was related to the increase in the amount of tax exemptions and reductions enjoyed by enterprises under tax and fee preferential policies and the substantial increase in the amount of losses made up by enterprises during the COVID-19 pandemic.
In the first seven months, the third largest tax category, domestic consumption tax (about 1 trillion yuan), increased by 5.5% year-on-year, mainly due to the increase in production and sales of refined oil, cigarettes, and alcohol. The third largest tax category, personal income tax (0.85 trillion yuan), decreased by 5.5% year-on-year, mainly due to the impact of the policy of increasing the standard of special additional deductions for personal income tax issued in the middle of last year, and also related to the sharp decline in income from property transfers such as houses.
According to the Ministry of Finance, in the first seven months, the stamp tax on securities transactions was 57.6 billion yuan, a year-on-year decrease of 55%. This is related to the tail effect of the policy of halving the stamp tax on securities transactions last year. Among the land and real estate related taxes, the deed tax and land value-added tax revenue continued to decline, reflecting that the real estate market is still sluggish.
In the national general public budget, tax revenue has declined. In order to make up for the decline in tax revenue, non-tax revenue has maintained rapid growth. According to the Ministry of Finance, non-tax revenue in the first seven months of this year was 2.4423 trillion yuan, a year-on-year increase of 12%.
Non-tax revenue has grown rapidly since the beginning of this year, which is related to the local governments' activation of existing assets and resources.
For example, data from the Jilin Finance Department showed that from January to July, the province's non-tax revenue was 24.76 billion yuan, up 29.5% year-on-year. Among them, the income from the paid use of state-owned resources (assets) was 10.87 billion yuan, up 53.7%, mainly driven by the increased disposal of resources and assets in various places; the fines and confiscations were 3.54 billion yuan, up 45.9%, mainly due to the centralized payment of fines and confiscations from major public security cases such as online gambling and online fraud, as well as discipline inspection and supervision.
Although fiscal revenue remained low in the first seven months, relevant officials from the Ministry of Finance judged that in the next few months, as macroeconomic policies took effect, the economic recovery trend continued to consolidate, and the impact of special factors gradually subsided, which would support the growth of fiscal revenue.
According to this year's central and local budget reports, the national general public budget revenue is expected to reach 22,395 billion yuan this year, an increase of 3.3%.
The sluggish real estate market has led to a continuous decline in local land transfer revenues, which is the main reason for the decline in government fund revenues in the first seven months of this year.
Data from the Ministry of Finance showed that in the first seven months of this year, the national government fund budget revenue decreased by 18.5% year-on-year. Among them, the local government fund budget revenue was 2090.9 billion yuan, a year-on-year decrease of 20.7%, of which the state-owned land use right transfer revenue was 1776.3 billion yuan, a year-on-year decrease of 22.3%.
In the first seven months of this year, the decline in local government revenue from the transfer of state-owned land use rights has significantly expanded compared with the first half of the year, reflecting the continued sluggish land market.
Luo Zhiheng suggested that real estate policies should continue to be optimized. For example, first-tier cities need to further relax purchase restrictions, continue to lower mortgage interest rates and other housing purchase costs for residents, increase the central government's support for local governments' purchase and storage, etc., so as to reverse the downward trend in real estate prices as soon as possible.
Fiscal spending will increase
From the expenditure side, the national general public budget expenditure maintained a certain strength, but due to income constraints and the slow issuance of special bonds, government fund expenditure still showed a significant decline.
According to the Ministry of Finance, from January to July, the national general public budget expenditure was 15,546.3 billion yuan, a year-on-year increase of 2.5%. Among them, expenditures in key areas were well guaranteed. Among them, social security and employment expenditures increased by 4.3%, agriculture, forestry and water expenditures increased by 8.2%, and urban and rural community expenditures increased by 7.2%.
A relevant official from the Ministry of Finance predicts that national general public budget expenditure is expected to grow steadily in the next few months.
Data from the Ministry of Finance showed that from January to July, the national government fund budget expenditure was 4122.8 billion yuan, a year-on-year decrease of 16.1%. Among them, the local government fund budget expenditure was 3994.6 billion yuan, a year-on-year decrease of 17.2%.
A relevant official from the Ministry of Finance said that in the first seven months of this year, various regions issued 1.7749 trillion yuan in new local government special bonds, which were mainly used for municipal construction and industrial park infrastructure, social undertakings, transportation infrastructure, affordable housing projects and other key areas identified by the Party Central Committee and the State Council. Special bond funds have played a positive role in strengthening the foundation, filling in the gaps, benefiting people's livelihood, and expanding investment, providing strong support for high-quality economic and social development.
However, the issuance of new special bonds in the first seven months of this year decreased by about 29% year-on-year. The slow issuance of special bonds is still an important factor restricting the efforts of local government funds.
The above-mentioned person in charge said that in the next step, the Ministry of Finance will work with relevant departments to guide and urge local governments to further accelerate the issuance and use of special bonds, improve the efficiency of the use of special bond funds, drive the expansion of effective investment, and promote the formation of physical workload as soon as possible.
In addition, 1 trillion yuan of ultra-long-term special government bonds are also planned to be issued this year. Combined with 2.4 trillion yuan of new bonds to be issued, the market generally expects that there will be a peak in bond issuance from August to November, which will support the steady growth of fiscal spending.
In addition, when deploying macroeconomic policies for the second half of the year at the Politburo meeting of the CPC Central Committee at the end of July, it was proposed to accelerate the full implementation of the determined policy measures, and to reserve and launch a batch of incremental policy measures as early as possible and in a timely manner.
Luo Zhiheng analyzed that the timely introduction of fiscal incremental policies in the future will attract more attention. This may be to issue more treasury bonds, or to increase the scale on the basis of 1 trillion yuan of ultra-long-term special treasury bonds, or to increase the scope of support for local government special bonds and expand the areas, scale, and proportion used as capital. At present, it is more necessary to have a total policy to increase the scale of fiscal expenditure.
(This article comes from China Business Network)
