Bank regulator wants business tax to be cut

　　CHINA’S banking regulator has suggested the country should lower the business tax rate on commercial lenders to help them counter slowing profit growth, industry sources said yesterday.

　　Senior officials at the China Banking Regulatory Commission said in a recent internal meeting that they hoped the central government could consider a plan to lower the 5 percent business tax.

　　"The banking regulator first floated this idea about two years ago and now it hopes the move can help banks to deal with the financial market turmoil," said a Shanghai-based banking executive.

　　Last year, China lowered the income tax rate of domestic banks from 33 percent to 25 percent but left unchanged the rate of business tax.

　　Sources noted that in order to get a lower business tax, commercial banks will be required to boost their lending to small and medium companies and rural areas.

　　Industry analysts, however, believed that slashing the business tax on lenders is not likely in the short term as the profitability of the banking sector is still higher than export-oriented industries.

　　"The average return on equity is still above 20 percent at domestic lenders, which is relatively high," said Qiu Zhicheng, a Haitong Securities Co analyst. "If the central government considers a business tax reduction, it may first go to more struggling sectors."

　　In addition, as the business tax revenue is handed over to the regional government where a company is based, instead of to the central government, it will probably be a highly complicated procedure to change the tax rate,according to the analysts