Tax revenues slowed sharply in the first nine months of the year due to the economic downturn, falling prices and structural tax cuts, the Chinese Ministry of Finance said yesterday.

In the first three quarters, tax revenues nationwide rose 8.6 percent annually to 7.74 trillion yuan (US$1.24 trillion), 18.8 percentage points slower than the growth seen in the same period last year, the ministry's statement said.

It said revenues from production-related taxes saw slowing growth from a year earlier.

Revenues from value-added taxes grew by 5.8 percent, down 12.9 percentage points from the same period last year. Revenues from corporate income tax expanded by 14.7 percent, down 21.1 percentage points.

The ministry attributed the deceleration to weakening economic growth, lower price levels and slowing property sales growth, as well as structural tax reduction policies.

Official statistics released last week showed that the economy expanded 7.4 percent annually in the third quarter, slowing for the seventh straight quarter and down from 7.6 percent in the second [Hong Kong company registration]quarter and 8.1 percent in the first.

The consumer price index, a main gauge of inflation, grew 1.9 percent annually in September, easing from 2 percent in August and 6.1 percent in September 2011.

Slower CPI expansion slashed growth in tax revenues which were calculated using current prices, the ministry said.

It also cited structural tax cut policies as a cause of slower rise in tax revenue.

The government has further deepened its structural tax cuts to maintain steady economic growth and stabilize [Set Up Company Hong Kong]prices since the start of the year.

The country has implemented policies to relieve tax burdens for medium- and low-income groups, support small- and micro-sized firms, promote the development of agriculture and rural areas, boost export growth and spur coordinated growth among different regions.