Data released on September 20 from the State Taxation Administration indicates that tax revenue collected by tax authorities in the first eight months of this year grew by 5.9% year-on-year, excluding customs-collected import VAT, consumption tax, tariffs, and vessel tonnage tax, and before deducting export rebates. This figure is 0.5 percentage points higher than the 5.4% GDP growth recorded in the first half of the year.

"Since tax revenue is calculated at current prices, the overall tax growth this year has basically matched economic growth," said Huang Lixin, director of the Taxation Science Research Institute under the State Taxation Administration. He attributed the slightly faster tax growth compared to GDP expansion to three primary factors.

Price level adjustments. Huang explained that the Producer Price Index (PPI), closely linked to tax revenue, reversed a 41-month negative trend in March of this year, turning positive. The index subsequently improved overall, accumulating a 2% increase over the first eight months, which drove faster growth in tax revenue calculated at current prices. However, due to the influence of the GDP deflator, the impact of price factors on tax and GDP growth differs.

Capital market activity. Trading in the capital markets has boosted stamp duty on securities transactions, corporate income tax, individual income tax, and domestic VAT. The capital market has been relatively active this year, spurring rapid growth in related taxes and industry tax revenues. Notably, stamp duty from securities transactions surged 82%, while tax receipts from related sectors also rose as enterprises gained from increased investment returns in the stock market.

Policy adjustments. The VAT Law and its implementing regulations took effect on January 1 this year, bringing corresponding changes to certain tax policies. Additionally, tax incentives that do not align with high-quality development or current conditions have been further regulated, influencing tax revenue without directly contributing to GDP growth.

"Tax revenue is primarily contributed by large enterprises, while small and micro businesses benefit from more preferential tax policies, resulting in their overall tax burden being significantly lower than that of large companies," said Chen Binkai, vice president of Central University of Finance and Economics. Tax data shows that in the first eight months, the top 10,000 enterprises by tax payment scale contributed nearly half of all tax revenue, while the top one million enterprises accounted for 90% of total tax payments, leaving small and micro businesses and other enterprises to contribute only about 10%.

"In recent years, China has implemented a series of tax and fee reduction policies benefiting small and micro enterprises, such as exempting VAT for small-scale taxpayers with monthly sales below 100,000 yuan and reducing the effective corporate income tax burden to 5% for qualifying small and low-profit enterprises. These measures have played a crucial role in easing the tax burden on the vast number of small and micro businesses," Chen added.