(Yicai) July 23 -- China's fiscal revenue fell 2.8 percent in the first six months of this year, mainly because of a high base a year earlier as well as tax cuts and deferral policies.

General public budget revenue was CNY11.59 trillion (USD1.59 trillion) in the first half, according to figures released by the Ministry of Finance yesterday. Excluding the impact of tax cuts and deferrals, fiscal revenue rose about 1.5 percent, the ministry noted.

Regarding major tax categories, domestic value-added tax fell 5.6 percent, corporate income tax dropped 5.5 percent, and personal income tax dipped 5.7 percent. In comparison, the domestic consumption tax rose 6.8 percent thanks to the consumption of refined oil, cigarettes, and alcohol.

Affected by the policy of halving the tax rate, the stamp duty on securities transactions plunged 54 percent in the first half from a year ago. Due to the sluggish real estate market, revenue from transferring state-owned land use rights fell 18.3 percent to CNY1.53 trillion (USD210.3 billion).

The national general public budget expenditure climbed 2 percent to CNY13.66 trillion, outpacing the revenue growth, showing that the proactive fiscal policy is being effectively implemented.

However, the growth rate was lower than the 3.4 percent in the first five months and below the expected annual growth rate of 4 percent, so fiscal expenditure needs to be further strengthened, according to experts.

The economic data for the first half reflects an insufficiently solid foundation for post-pandemic recovery, Luo Zhiheng, chief economist at Yuekai Securities, told Yicai. More proactive fiscal policies are needed for consolidation and enhancement, he added.

It is necessary to issue additional government bonds to compensate for the shortfall in expenditure caused by low growth in land transfer revenue and tax income this year, further leveraging the counter-cyclical adjustment role of fiscal policy, Luo noted.

Proactive fiscal policy should play a more significant role, said Yuan Haixia, executive director of the Research Institute of China Chengxin International Credit Rating.

The net financing of government bonds will likely increase by around CNY2 trillion to CNY5.6 trillion in the second half of this year from the first, according to institutional estimates.

Editor: Martin Kadiev