The mainland's fiscal revenue rose 31.2 per cent year on year to 5.69 trillion yuan (HK$6.85 trillion) in the first half of this year, continuing a trend that has seen this revenue outpace growth in economic output and household incomes for years.
In the same period, tax revenue reached 5 trillion yuan, up 29.6 per cent, while expenditure rose 31.4 per cent to 4.44 trillion yuan, the Ministry of Finance said yesterday.
The ministry attributed most of the rapid growth in revenue to the country's economic growth and higher prices. However, it said that the robust revenue growth was likely to slow in the second half, with economic growth expected to ease and fewer people having to pay income tax from September.
Last month, the Standing Committee of the National People's Congress, the country's top legislature, approved an increase in the personal income tax threshold from 2,000 yuan to 3,500 yuan. It will come into effect on September 1.
Major economic data released on Wednesday showed much slower growth in ordinary people's incomes.
Indirect taxes such as value-added and business taxes are the main source of the mainland's fiscal income, instead of direct taxes as in most free economies.
Over the past decade, the state coffers have often seen high double-digit growth, while gross domestic product has risen by about 10 per cent a year and household incomes by single-digit percentages.
Last year, state fiscal revenue jumped 21.3 per cent, GDP grew by 10.3 per cent and urban residents' income rose 7.8 per cent, according to government data.
'The near 30 per cent growth in tax revenues is consistent with the historical relation between tax revenue and industrial production,' Tim Condon, chief economist with ING Asia, said.
Condon said an open-door policy saw government revenue sink to 10 per cent of GDP by 1995 before climbing back to 21 per cent last year.
'I think the buoyancy we see in government revenue is the result of economic reforms and that government revenue will plateau at 25 per cent of GDP,' Condon said.
A study by Chang Xiuze , an economist with the Research Institute of Macroeconomics, a National Development and Reform Commission think tank, said that from 1997 to 2007, the percentage of three main components of GDP - state revenue, corporate profits and work-related income - had changed dramatically.
State fiscal revenue increased from 10.95 per cent to 20.57 per cent, with state revenue accounting for near 30 per cent if non-fiscal revenue such as income from land sales and service charges was included. Corporate income grew from 21.23 per cent to 31.29 per cent while work-related income decreased from 53.4 per cent to just 39.74 per cent.
Professor Ma Guoxian , director of the Public Policy Research Centre at the Shanghai University of Finance and Economics, said the bigger ratio of state revenue meant a smaller slice of the economic cake for households.
'The problem now is that the share of household income in the cake is decreasing as a result of fast rising state revenue,' he said.
The rate the mainland's economy grew by year on year in the first half of the year. Official figures say consumer inflation hit 5.4 per cent