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The growth of tax revenue this year has so far exceeded 700 billion yuan (US$88.5 billion), and is expected to break 800 billion yuan (US$101.2 billion). This was predicted by Gao Peiyong, deputy director of the Chinese Academy of Social Sciences' Institute of Finance and Trade Economics on October 15.

According to the National Bureau of Statistics (NBS), the first three quarters of this year saw total tax revenue rise to 2.842 trillion yuan (US$359.4 billion), 22.5 percent higher year-on-year.

Gao ascribed the growth to the enhanced efficiency in tax departments since China's whole tax system did not change much.

He quoted figures from the NBS, stating that in 1994 the ratio of "actually collected taxes" was barely over 50 percent. However, by 2003, it had climbed to 70 percent, due to the decline of tax dodging and evasion.

"Improved management and efficiency have contributed about 70 percent of the growth," Gao said.

In the past two years, the average annual increase stood at over 500 billion yuan (US$63.2 billion) while in 2005, the total tax revenue reached 3.0866 trillion yuan (US$390.3 billion), not including tariffs and agriculture taxes.

In May 2005, China ranked second among high-taxation countries, according to Forbes.

Gao explained that the "nominal tax rates" are quite high in China; however, due to limited management and efficiency of tax departments at all levels, the ratio of "actually collected taxes" is low. The tax revenue growth in recent years reflects this gap.

As the gap gets narrowed with the strengthened tax collection by tax authorities, according to Gao, both the enterprises and people have felt that the tax burden is getting heavier.

(China.org.cn by Wang Ke, October 19, 2006)