CASS: 40% of Government Income from Non-tax Revenue

By Tang Xiangyang
Published: 2010-09-17

On September 10, the Chinese Academy of Social Sciences (CASS),an academic research organization directly under the State Council, released a Report on China's Fiscal Policies revealing that the Chinese government collected 10.8 trillion yuan in fiscal revenue in 2009, equivalent to 32.2 percent of the country's GDP for the year.

The CASS report also predicted that fiscal revenue would remain somewhere between 31 and 35 percent of GDP over the period of the 12th Five-Year Plan, which will run from 2011-2015.

Before the publication of the report, Jia Kang, director of the Fiscal Science Research Institute under the Ministry of Finance, had said that China's fiscal revenue only accounted for 19.3 percent of GDP in 2007, 19.5 percent in 2008 and 20.1 percent in 2009 - ratios much lower than the level reported by other countries.

Another official with the Ministry of Finance said, even if calculated by the method adopted by the International Monetary Fund, the ratios for the past three years were still only 24, 24.7 and 25.4 percent respectively, which are again much lower than the levels in most developed and developing countries.

The major reason why the CASS and Ministry of Finance data does not tally, is that officials with the Ministry of Finance only took tax revenue in to account when measuring fiscal revenue.

Aside from revenue raised through taxation, the government also raises revenue from other sources such as general budget revenue, government funds, non-budget revenue, land use fees, social security dues and other administrative charges.

For example, while all levels of Chinese government collected a total of 6.3 trillion yuan in tax revenue in 2009, total government revenue exceeded ten trillion yuan.

According to the above report, the ratios of China's fiscal revenue to GDP from 2007 to 2009 were 31.5, 30.9 and 32.2 percent respectively.

According to the report released by the Chinese Academy of Social Science, the Chinese government only spent an amount equal to 10.57 percent of GDP on education, health care and unemployment benefits. The authors of the report suggest that expenditure on these areas should be raised to 13.5 percent of GDP during the course of the next 5 Year-Plan and they note that most developed countries already spend an amount equivalent to over 20 percent of GDP on such services from 1980 onward.

This article was edited by Paul Pennay

Links and
Press Conference for the Release of the Report (Chinese)
China Securities Journal: 中国首份政府收入账本:非税收入占据4成多 (Chinese)
The Economic Observer: 税收高增长缘于税改 十二五增长放缓 (Chinese)