China’s Budget Shows New Revenue Boost
March 5, 2012 Taxation in China
BEIJING – China has unveiled its draft budget for the 2012 year, showing that tax revenues and government spending are expected to increase significantly.
At a session of the 11th National People’s Congress of China on March 5th the Ministry of Finance presented, on behalf of the State Council, to members of the Congress the draft budgets for the central and local governments for 2012, detailing expected expenditures and revenue streams in China for the current year.
Analyzing the presented economic situation in China and fiscal expectations for the year, the Ministry of Finance forecasts that the total tax revenues in 2012 for the central government and all local governments will be RMB 11.63 trillion. Collections of value added tax is expected to be the biggest contributor to the cumulative tax revenues for the year, growing by 10.8 percent compared to the previous year and reaching an estimated total of RMB 2.03 trillion. Customs duties and VAT on imported goods will be the second largest contributor, bringing in nearly RMB 1.8 trillion to the country’s budget. Corporate income taxes and individual incomes taxes will raise RMB 1.1 trillion and 340 billion respectively.
Following an inspection of expenditures of the government in previous years and analysis of the expected outlays for 2012, the Ministry of Finance forecast that during the year government spending will be 14.1 percent higher than it was in 2011 and will reach a total of RMB 12.43 trillion. National defense will take up the largest portion of the expenditures, requiring RMB 650.3 billion, up 11.4 percent from 2011. Spending on social security and employment will rise by 21.9 percent in 2012, reaching RMB 575.1 billion. Expenses for agricultural, water and forestry projects will cost 549.15 billion.
Taking into account the revenue streams and expenditures, the Ministry of Finance said that the national budget deficit for China in 2012 will be approximately RMB 800 billion.
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