"Economic growth is basis for increase in tax revenue, but the increase of tax revenue is not necessarily at same amplitude with the GDP growth." An official with the State Taxation Administration explains a problem that has confused many people: why the growth in tax revenue is higher than that of the GDP.

From January to October, China has realized tax revenue of 2177.5 bln yuan, 27.1 percent higher than the same period of last year. The amplitude of increase is evidently higher than the GDP growth.

"Many reasons have led to this phenomenon," the official says. An important reason is that the increase of tax sources is higher than that of GDP, therefore the tax revenue is naturally higher than that of GDP.

For example, the value-added tax, which represents 35 percent of the total tax revenue, is collected from the added value of industry and commerce. In the first three quarters this year, the added value that large-scale industries realized rose 17 percent as against the previous year. This is higher than the GDP growth.

In some industries, the increase of operational income outpaces the growth of added value in its related areas. In the first three quarters, two sources of sales tax of transportation: the cargo turnover and passengers transported rose by 20.8 percent and 24.7 percent respectively. Both numbers are higher than GDP growth.

In the enterprise income tax, which has less influence on GDP's proportion, the increase of profit in the large-scale industries rises by 39.8 percent, higher than the growth of GDP too.

"Calculation standard is another factor that gives rise to the phenomenon," says he. According to the standard used to calculate tax revenue, the tax revenue includes value-added tax at import process and consumption tax, but the export drawback is not taken into account. Therefore the great increase in import & export will result in fast rise in tax revenue. While the GDP is calculated on the basis of net value of import & export.

In addition, price is a factor that affects the comparison between tax and GDP. The GDP growth released is calculated on the basis of fixed price, i.e. the inflation of the year is not considered; while the calculation of tax revenue growth is based on the current price, so the inflation is embodied in the tax revenue. According to statistics, the price indexes keeps on rising in China in the first three quarters, which will cause the growth of tax revenue higher than that of GDP.

"The key to weigh whether the increase of tax revenue normal or not is to see if the tax revenue increase is proportional to the increase of tax sources," the official says. The fact that growth of tax revenue is faster than GDP growth is absolutely normal as long as the increase of tax revenue is proportional to the growth of the corresponding tax sources.

Revenue from major taxes has kept a proportional increase with the corresponding sources from January to October. This means the increase in tax revenue is of high quality.

By People's Daily Online