The mainland's fiscal revenue surged 34.4 per cent last month from a year ago, keeping Beijing with sufficient funds to manage a slowdown in economic growth in the face of an escalating European debt crisis and a possible double-dip US recession.
The income of the central and local governments swelled in August to 754.6 billion yuan (HK$918 billion), mainly from taxes, according to data released by the Ministry of Finance yesterday.
The strong growth, which followed a 27 per cent year-on-year rise in July, was fuelled by economic expansion and price increases, as well as by 'special petroleum proceeds', a quarterly charge to oil companies levied on high oil prices, the ministry said.
Wang Tao, an economist at UBS Securities, thinks the government might ease fiscal policies by early December. This could happen, he said, 'if exports have dropped, and industrial production and construction have slowed sharply'.
Other economists predict increased spending on social housing and other public works to offset a cooling in the economy.
The finance ministry forecast that fiscal revenue growth would slow in the coming few months, 'because the domestic economy is expected to slightly decelerate and fewer people will have to pay income tax from September'.
The Standing Committee of the National People's Congress, the country's top legislature, in June approved an increase in the minimum personal income tax threshold from 2,000 yuan to 3,500 yuan. It became effective on September 1.
The growth rate of China's fiscal revenue has outpaced that of the economy as a whole as well as individual incomes for years.
The nation's gross domestic product expanded 9.6 per cent year on year in the first half of 2011, while urban residents' disposable income rose 13.2 per cent and rural incomes grew 20.4 per cent, according to the National Bureau of Statistics.
The mainland's fiscal revenue has now risen 30.9 per cent across the first eight months of the year, to reach 7.43 trillion yuan. For the first eight months of the year, outlays grew 29.2 per cent to hit 5.95 trillion yuan.
It means there is a healthy surplus, although fiscal expenditures in August actually exceeded income, rising 25.9 per cent from a year earlier to 807.7 billion yuan, according to the finance ministry,
Education expenditures rose 26.5 per cent year on year, social security and employment increased by 34.5 per cent, traffic and transportation jumped 39.7 per cent and government-subsidised housing construction surged by 68 per cent, the ministry said.