The mainland's fiscal revenue growth slowed sharply in April as weaker corporate profits reduced the amount of company income tax, the official China Securities Journal reported yesterday.
Slowing growth in state revenue was expected to add strain to the government's fiscal position as relief work and reconstruction after the Sichuan earthquake would require huge spending, economists warned.
Fiscal revenue in April rose 17 per cent from the year-ago period to 682.5 billion yuan (HK$767.27 billion), but the rate was much lower than the 24.7 per cent annual growth seen in March, the 36.6 per cent in February and the 42.4 per cent in January.
Corporate income tax revenue, the government's single largest fiscal revenue source which accounted for 17.1 per cent of fiscal revenue last year, was down 11.9 per cent year on year in April and 11.7 per cent from the previous month.
The government has already earmarked 95 billion yuan for rescue operations related to the quake and to fund the resettlement of people made homeless. However, more funds will be needed as overall reconstruction begins.
Economists forecast that 200 billion yuan to 500 billion yuan will be needed for the reconstruction.
'Based on sector-by-sector calculations and discussions with the government and reconstruction experts, we estimate that post-quake reconstruction spending will exceed 500 billion yuan in the next three years,' said Ma Jun, chief China economist at Deutsche Bank.