The decline in fiscal revenues is accelerating, stimulating the economy, and it should not be a headache

Luo sir's words

2024-05-25 17:17Posted in Sichuan Workplace Creators

The decline in real estate and the continued weakness in domestic demand weigh on the economy is a perennial issue.

According to the latest data released by the Ministry of Finance, the mainland's fiscal revenue fell by 2.7% year-on-year in the first four months of this year, compared with a year-on-year decline of 2.3% in the first quarter of January-March, which further indicates that the macroeconomic recovery is still weak.

Xinhua News Agency quoted the Ministry of Finance as saying that after deducting the impact of special factors such as the tax deferral, the increase in the base of tax deferrals for small, medium and micro enterprises in the same period last year, and the tax cuts introduced in the middle of last year, the comparable growth of fiscal revenue was about 2%.

The report also said that fiscal spending rose 3.5 percent in the first four months of this year, higher than the 2.9 percent increase in the first quarter of this year.

According to Reuters calculations based on data from the Ministry of Finance, in April this year, the mainland's fiscal revenue fell by 3.7%, while in March it fell by only 2.4%; At the same time, fiscal spending rose by 6.1% in April, compared with a decline of 2.9% in March.

These data all suggest that the pressure on the economic recovery remains.

One person's consumption is another's income, and finance is also in line with this logic; When the macroeconomic situation is good, the growth of fiscal revenue will theoretically accelerate, and when the growth of fiscal revenue is sluggish, the macroeconomic situation will naturally be under pressure.

Considering that the mainland's economic target for this year is 5% growth, considering the continued decline in real estate and the continued weakness of domestic demand, it is still challenging to achieve the 5% growth target this year.

In addition, as an important tool to measure credit and liquidity in the economy, the total outstanding social financing on the mainland fell from 8.7% in March to 8.3% in April, which also indicates that the mainland's credit and liquidity are still sluggish.

In other words, the mainland's macroeconomy has not yet escaped the "liquidity trap", and the risks of deflation and the middle-income trap still objectively exist.

With a macroeconomic downturn, stimulating the economy is becoming increasingly important.

The Ministry of Finance announced on May 13 that it would start issuing ultra-long-term special treasury bonds totaling 1 trillion yuan from the same week to stimulate the economy and boost the recovery and development of key industries and key construction.

On May 17, a series of new measures aimed at turning the real estate sector around were launched, including aggressive acquisitions of surplus homes, lower mortgage down payments, and the removal of interest rates for first and second homes.

Among them, the 1 trillion yuan ultra-long-term treasury bonds can be regarded as a measure to stimulate domestic demand and boost consumption; The vigorous relaxation of the real estate industry is a measure to stimulate the recovery of the real estate industry.

These two measures to stimulate the economy can be said to be the right medicine, and they are essentially aimed at stimulating economic growth in order to achieve the annual growth target of 5%.

But the decline in fiscal revenues has also shown us the delay and diminishing marginal benefits of economic stimulus measures.

From January to April this year, the mainland's corporate income tax was 1,789.8 billion yuan, a year-on-year increase of only 0.9%; The personal income tax was 500.7 billion yuan, a year-on-year decrease of 7%. The stamp duty was 135.8 billion yuan, down 17.1% year-on-year, of which the stamp duty on securities transactions was 33.9 billion yuan, down 52.7% year-on-year.

Personal income tax fell by 7%, which means that either the number of unemployed people has increased, or the income of working people has fallen, and in short, the decline in personal income tax means that the income of mainland residents has plummeted and unemployment has increased.

This is not good news for the next stimulus to consumption.

Especially when the real estate downturn is superimposed.

In the past, mainland residents spent money on the back, largely because the prices of houses behind them were rising every year, which strengthened the expectations of mainland residents' consumption.

However, with the decline of real estate, household assets have begun to evaporate and shrink, if the superimposed income decline, personal income tax reduction, then resident consumption will only be more rational, consumption downgrade is the general trend.

At this time, any of our rescue measures may achieve a "headache cure" counterproduct.

What is a headache treatment?

In fact, we can see from a series of rescue measures in the post-epidemic era that the rescue funds are all saved by developers, real estate, local finance, urban investment companies, small and medium-sized enterprises, and listed enterprises, and few of them are directly given to ordinary people, residents and consumers.

In today's macro economy, the root cause of many structural cruxes we face may not be in a certain enterprise or industry, and the ultimate root cause is actually ordinary people, that is, consumers.

Why is real estate in the doldrums?

That's because the capital chain of real estate developers is broken, and because of the imbalance between supply and demand in the market, which is the inevitable result of the market.

Behind the downturn in our consumption, it is not because of the difficulties of business operations, not because of the heavy burden on enterprises, but because consumers have no money, consumers have increased uncertainty about the future, and consumers have no security and lack of confidence.

Therefore, our relaxation measures for the property market and support for enterprises seem to be very effective, but if consumption is sluggish and consumption is not confident, then no matter how much support and subsidies are given to enterprises, the final result may be just a "headache and a cure", and will not achieve particularly great results.

The 1 trillion ultra-long-term treasury bonds also have a similar effect, and this money is invested to subsidize some key and specific industries, but the problem is that if consumers do not have the money to support high-frequency consumption, then what is the use of giving more subsidies to the industry?

The decline in personal income tax is essentially the result of a sharp decline in people's income, more and more people's salaries do not reach the threshold of 5000 monthly income, so it leads to the decline of personal income tax.

Of course, many people will say that the three years of the new crown virus have been so difficult, and we have not given out cash, is it necessary to find money now to encourage ordinary people to spend?

In my opinion, the current macro background may be a more difficult moment than those three years.

After all, during the three years of the coronavirus, our external environment was far less complicated, and people at that time were more concerned about the arrival of revenge consumption after the end of the coronavirus.

But then we all saw the results, so far the new crown virus has passed for several years, and our consumer confidence index is still only 89.4, what does 89.4 mean?

Let's put it this way, during the three years of the new coronavirus, our consumer confidence index has not been lower than 100 at the lowest.

Even during the 2008 global financial crisis, our consumer confidence index did not fall below 100, so to speak, the lowest consumer confidence index in the history of the data.

Consumers have no confidence in consumption, obviously not only because of lack of confidence in the future, nor is it a lack of effective demand, behind the lack of demand, in fact, there is simply no money, no extra money to consume.

Under the premise that the cost of living in medical care and education remains unchanged, consumers' consumption will only tend to be rational, not irrational.

Although the mainland has hardly distributed cash for residents' consumption since the introduction of the market economy for more than 40 years ago, this does not mean that this measure to stimulate the economy has not worked; on the contrary, the experience of European and American countries has long shown that the method of "throwing money by helicopter" has an unprecedentedly powerful stimulating effect on the economy, especially on consumption and employment.

One person's consumption is another person's income, the more people consume, the more employees are willing to hire under the growth of corporate revenue, in addition to the premise of optimistic consumption situation, enterprises will have a higher willingness to increase employee salaries and improve the current fierce involution environment.

These are the measures we should do now.

It is precisely because we have never had a "helicopter money" method that the effect of this method on economic stimulus is also unprecedentedly strong, and the cost of diminishing marginal benefits is almost zero, which is far better than the effect of subsidizing enterprises and subsidizing industries to reduce taxes.

On top of that, it's more realistic that we don't have a lot of tools in our toolbox, and sending money is one of the few things that really works.

Looking at the stimulus measures in recent years, our property market has almost ushered in a comprehensive relaxation, tax cuts and refunds for small and medium-sized enterprises have also been implemented for several years, and subsidies for the automobile industry have almost begun to fade, so it is a good time to send money.

In addition to distributing money, other current ways to stimulate the economy may become "headache cures" and it is difficult to achieve the desired results.

We should see that consumers' preferences for consumption have begun to have signs of solidification, and if we do not send money to stimulate consumption at present, then the solidified consumption habits may evolve into a long-term consumption downgrade, and the effect of any stimulus measures may be negative returns.

Sending money seems to be the most cost-effective, but considering the targeted consumption stimulus subsidies, the GDP that will eventually be leveraged is the most cost-effective method.

When the stimulus is exhausted and still does not have the desired effect, we must be brave enough to do things that have never been done before.

In the face of such a severe macroeconomic situation, we can no longer be conservative, and we must strike hard and give targeted and targeted stimulus measures.

Recently, I have also seen that Mr. Zhou Qiren, a big economist who is biased towards the market, has reappeared in the field of vision of high-level economic meetings, which has already indicated a good signal that our economic stimulus direction will be back on track, which is an excellent signal in itself.

In view of the current macroeconomic structural crux, Sima Nan and Zhang Wei and others will only mislead people's children, and only by fully respecting the market and respecting the economy can we break through the current structural dilemma and usher in high-quality growth again.

To stimulate the economy, we have to treat where there is a problem, and follow the oldest market principles.

Because it determines our future.

end.

Author: Luo sir, concerned about the economy, society and everything in our world, curious about the logic behind the development of things, optimistic pessimist.

View original image 38K

• 

• 

•