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Ningbo: The Tertiary Industry Thrives to Promote City Development
2019-02-24Text Size: A A A

Tax officers in Fenghua District are learning how the building material enterprises operate, and giving policy guidance.

 

The development of the tertiary industry is an important indicator of a country or region’s productivity. Recently in an in-depth analysis of the city’s tertiary industry, the tax officers analyzed the advantages and weaknesses of the section from the perspective of taxation. The analysis provides reference for decision-making in replacing the old drivers of growth in the industry.

The Tertiary Industry Unleashes Great Potential

The Taxation Economy Blazes New Trial

In recent years, the city’s tertiary industry has been booming due to economic restructuring and it has emerged as an important driving force for economy.

According to the tax office, the city’s tertiary industry leads the charge in the country, which contributes 45% to GDP. In 2017, the industry contributed 98.16 billion yuan to taxation, accounting for 43.4% of total. Traditional advantageous industries including business, finance, the real estate and transportation were great contributors, achieving an added-value of 255.35 billion yuan, 25.9% of the city’s GDP. Roughly 67.67 billion yuan of tax was collected from these industries combined, assuming 29.9% of the city’s total and registering an annual growth of 14.6% in the past decade.

Modern service industry is gaining strong momentum. Its growth will produce great impact on the industry’s upgrading. In the past few years, Ningbo has pushed its productive service industry towards professional development with higher added value, and its life service industry towards quality development. Ultimately, the modern service industry has unleashed great potential. In terms of taxation, tax collected from commercial service industry, technology service industry and information technology service industry has been expanding with strong momentum. In 2017, the three industries contributed 17.43 billion yuan to taxation, with an annual growth of 24.8% in the past decade. They contributed 17.8% to taxation of the tertiary industry in 2017, up from 7.4% in 2007.

The analysis report shows that a tertiary industry pattern led by industries in the urban area with salient industrial characteristics in all other counties and districts have gradually taken shape.

The taxation shows that the tertiary industries are mainly located in downtown area, including Haishu District, Jiangbei District, Zhenhai District, Beilun District, Yinzhou District and Fenghua District, as well as in Yuyao-Cixi area including Yuyao City and Cixi City. In the first half of 2017, the areas above collected respectively 80.88 billion yuan and 14.37 billion yuan in taxation from the tertiary industries, accounting for 82.4% and 14.6% of total. Thanks to solid foundation for the service industries, prominent advantages in harbors, and well-developing financial, real estate, leasing and business services, transportation, warehousing and postal services in the downtown area, the tertiary industries combined achieved a regional taxation of 44.33 billion yuan, accounting for 84.5% of the city’s total. With relatively smaller share of tertiary industries though, Ninghai and Xiangshan Counties harbor salient industry features and good momentum for growth. In 2017, the construction industry and recreational industry in these regions contributed 1.2 billion yuan to taxation with an annual growth rate of 21.4% in the past decade.

 

Specialized modernization needs to be accelerated

Although the scale and speed of the development of the tertiary industry have been greatly improved in recent years, Ningbo is still lagging behind other cities. In the five municipalities with independent planning status, the value added of Ningbo’s tertiary industry in 2017 is only one-third of that in Shenzhen, and less than three-quarters of Qingdao, which is only higher than Xiamen. The average tax contribution rate of the tertiary industry in Ningbo was only 39.21%, but the fourth-ranked Dalian has reached 49.81%.

The regional advantage of Ningbo’s tertiary industry needs to be further explored. Due to the limitation of location conditions and innovation ability, the city’s independent economic radiation capacity needs to be improved. The lack of comprehensive competitiveness has affected the headquarters effect of Ningbo’s logistics industry. The relevant data for the past 10 years indicates that the proportion of transportation warehousing and postal industry in the overall tax revenue of the three industries fell, from 3.1% in 2007 to 2.0% in 2017.

In addition, the shortcomings of the modern service industry in our city cannot be ignored. Modern service industry in the tertiary industry lags behind, while the higher value added and higher taxes are these related industries such as commerce, finance and real estate. In 2017, the above-mentioned industries reached an added value of 213.971 billion yuan, accounting for 48.33% of the total added value, while the remaining industries accounted for less than 10%. These enterprises realized a total tax revenue of 63.121 billion yuan in 2017, accounting for 64.3% of the total tax revenue of the tertiary industry. The proportion of other industries in the modern service industry is less than 3%, except for the relatively large proportion of leasing and business services (>10%). At the same time, the homogenization competition in the traditional service industry is fierce, as its development is relatively mature and the market tends to be saturated. In 2017, the growth rate of the commercial industry’s added value was only 8.4%, far lower than the 15.2% in 2007.

The degree of tax incentives enjoyed by the industry is clearly differentiated. Due to the wide variety of current tax incentives and the lack of industry specificity, a large number of enterprises actually receive uneven benefits, especially service companies. In 2017, Ningbo’s   tertiary industry (excluding privately or individually-owned business) actually enjoyed a tax reduction of 29.54 billion yuan. The tax reductions among different industries are quite different, including the total amount of tax relief for transportation and postal services, wholesale and retail trade and financial industry, which accounts for about 34.0% of the total tax reduction for tertiary enterprises, while the remaining industries account for less than 10%. Tax incentives also need to be increased to support emerging services.


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