Business
China’s Tax Revenue Declines as Its Leaders Brace for Trump’s Tariffs
Buried in China’s latest government budget were some numbers that add up to an alarming trend. Tax revenue is dropping.
The decline means that China’s national government has less money to address the country’s serious economic challenges, including a housing market crash and the near bankruptcy of hundreds of local governments.
Weak tax revenue also puts China’s leaders in a box as they square off with President Trump, who has imposed 20 percent tariffs on goods from China and threatened more to come. Beijing has less spare cash to help the export industries that are driving economic growth but could be hurt by tariffs.
The drop in tax collections leaves China’s leaders in an unfamiliar position. Until the last several years, China enjoyed robust revenue, which it used to invest in infrastructure, a rapid military buildup and extensive industrial subsidies. Even as economic growth has slowed gradually over the past 12 years, taking a dent out of consumer spending, tax revenue held fairly steady until recently.
Tax revenue fell further last year than ever before. And the only two previous declines in recent decades were under special circumstances: In 2020, China imposed an essentially nationwide pandemic lockdown for a couple of months, and in 2022, Shanghai endured a two-month lockdown.
China’s declining tax revenue now has several causes. A big one is deflation — a broad decline in prices. Companies and now the Chinese government find themselves with less money to make monthly payments on their debts.
Since September, Chinese officials have promised several times that they were on the cusp of doing what practically every foreign and Chinese economist recommends: spending more money to help the country’s beleaguered consumers with such measures as higher pensions, better medical benefits, more unemployment insurance or restaurant vouchers. But again and again, including on Sunday, they have laid out ambitious programs without providing more than a smidgen of extra spending.
The usual explanation for the frugality lies in longstanding opposition from Xi Jinping, China’s top leader, who warned in a speech in 2021 that China “must not aim too high or go overboard with social security, and steer clear of the idleness-breeding trap of welfarism.”
But China’s 2025 budget, which the Ministry of Finance released on March 5, suggests a different explanation: The national government may not have the money. Despite record borrowing, it would be hard-pressed to find the money needed to stimulate consumption.
Overall tax revenue fell 3.4 percent last year. That might not look like a lot. But it is a sizable divergence from the overall economy, which according to official statistics grew 5 percent before being adjusted for deflation.
Falling tax revenue means that China’s budget deficits are widening not because of extra government spending to help the economy, but because there is less money coming into the till. The problem has been worsening for years at local governments, which have plummeting revenues from selling state land, and has spread to the national government.
Fitch Ratings calculates that overall revenue for the national and local governments — including taxes and land sales — totaled 29 percent of the economy’s output as recently as 2018. But this year’s budget indicates that overall revenue will be just 21.1 percent of the economy in 2025.
Roughly half of the decline comes from plummeting revenue from land sales, a well-documented problem related to the housing-market crash, but the rest comes from weakness in tax revenue, a new problem.
That adds up to a huge sum of money. If overall revenue had kept up with the economy over the past seven years, the Chinese government would have another $1.5 trillion to spend in 2025.
China announced this month that it would allow its official target for the budget deficit to increase to 4 percent this year, after trying to keep it near 3 percent ever since the global financial crisis in 2009. But analysts say the true deficit is already much larger, because China is quietly counting a lot of long-term borrowing as though it were tax revenue.
Comparing spending only with actual revenue, without the borrowing, the Finance Ministry’s budget shows a deficit equal to almost 9 percent of the economy. In 2018, it was only 3.2 percent.
“Deficits are quite high and debt is rising quite quickly, so they are fiscally challenged,” said Jeremy Zook, a director of Asia and Pacific sovereign ratings at Fitch.
The biggest taxes in China are value-added taxes, a kind of sales tax that the government collects on practically every transaction, from rent to refrigerators. Last year, revenue from value-added taxes fell short of expectations by 7.9 percent.
The word “deflation” is prohibited in official Chinese documents, so the ministry came up with a euphemistic explanation: “This decrease was mainly due to the fact that the producer prices were lower than expected.”
Producer prices, essentially wholesale prices calculated as goods leave factories and farms, fell 2.3 percent in China last year.
Revenue from value-added taxes began weakening in 2018. That was when the government cut these taxes sharply for exporters to help them offset the impact of tariffs imposed by President Trump in his first term.
The cost of that tax break has soared since then as China’s exports have surged, producing a trade surplus of almost $1 trillion last year even as the rest of the economy stagnated.
Another problem lies in falling salaries and rising layoffs, especially during the second half of last year. Income taxes collected from individuals were 7.5 percent below expectations last year, the Finance Ministry said in its budget.
China’s own steep tariffs on imports are another large source of revenue. But having lost much of their savings in the housing market crash, China’s consumers have cut back on purchases of imports like handbags and perfume, while prices have fallen for many imported goods. So revenue from customs duties was 9.2 percent below forecasts last year, the Finance Ministry said.
This year’s financial picture could be even worse than the budget anticipates. The Finance Ministry’s budget repeated many of the same optimistic assumptions about tax revenue and overall economic performance that it made last year.
Governments in the West derive considerable revenue from taxes on investment gains, inheritances and real estate. But China has no taxes on investment gains or inheritances and almost none on real estate.
The general lack of real estate taxes lies at the root of a separate problem: China’s local governments are also running out of money. Until recently, they derived up to 80 percent of their revenues from selling land to property developers.
But those sales have plummeted since the housing crash began in 2021, which has gutted demand for new apartments and bankrupted many developers.
Local governments are responsible for most pensions, medical benefits and other social spending in China. The national government has been selling extra bonds to raise money for bailing out the weakest local governments, many of which are behind on their debts. The national government has called for local governments to step up social spending but, short on cash itself, has offered scant new financial assistance.
And new taxes are not likely forthcoming, according to Jia Kang, a retired research director at the Finance Ministry and still one of China’s most influential voices on tax policy. He said in an interview that public opposition to inheritance taxes is strong, while taxes on investment gains or real estate would hurt stocks or the housing market.
One factor not causing China’s tax challenges is fraud or tax evasion, Mr. Jia said. The procedures for checking on payments have become very detailed, he said. “It is difficult to cheat in this system.”
Siyi Zhao contributed research.
Business
Video: Why Your Paycheck Feels Smaller
new video loaded: Why Your Paycheck Feels Smaller
By Ben Casselman, Nour Idriss, Sutton Raphael and Stephanie Swart
April 18, 2026
Business
Civil case against Alec Baldwin, ‘Rust’ movie producers advances toward a trial
Nearly two years after actor Alec Baldwin was cleared of criminal charges in the “Rust” movie shooting death, a long simmering civil negligence case is inching toward a trial this fall.
On Friday, a Los Angeles Superior Court judge denied a summary judgment motion requested by the film producers Rust Movie Productions LLC, as well as actor-producer Baldwin and his firm El Dorado Pictures to dismiss the case.
During a hearing, Superior Court Judge Maurice Leiter set an Oct. 12 trial date.
The negligence suit was brought more than four years ago by Serge Svetnoy, who served as the chief lighting technician on the problem-plagued western film. Svetnoy was close friends with cinematographer Halyna Hutchins and held her in his arms as she lay dying on the floor of the New Mexico movie set. Baldwin’s firearm had discharged, launching a .45 caliber bullet, which struck and killed her.
The Bonanza Creek Ranch in Santa Fe, N.M. in 2021.
(Jae C. Hong / Associated Press)
Svetnoy was the first crew member of the ill-fated western to bring a lawsuit against the producers, alleging they were negligent in Hutchins’ October 2021 death. He maintains he has suffered trauma in the years since. In addition to negligence, his lawsuit also accuses the producers of intentional infliction of emotional distress.
Prosecutors dropped criminal charges against Baldwin, who has long maintained he was not responsible for Hutchins’ death.
“We are pleased with the Court’s decision denying the motions for summary judgment filed by Rust Movie Productions and Mr. Baldwin,” lawyers Gary Dordick and John Upton, who represent Svetnoy, said in a statement following the hearing. “He looks forward to finally having his day in court on this long-pending matter.”
The judge denied the defendants’ request to dismiss the negligence, emotional distress and punitive damages claims. One count directed at Baldwin, alleging assault, was dropped.
Svetnoy has said the bullet whizzed past his head and “narrowly missed him,” according to the gaffer’s suit.
Attorneys representing Baldwin and the producers were not immediately available for comment.
Svetnoy and Hutchins had been friends for more than five years and worked together on nine film productions. Both were immigrants from Ukraine, and they spent holidays together with their families.
On Oct. 21, 2021, he was helping prepare for an afternoon of filming in a wooden church on Bonanza Creek Ranch. Hutchins was conversing with Baldwin to set up a camera angle that Hutchins wanted to depict: a close-up image of the barrel of Baldwin’s revolver.
The day had been chaotic because Hutchins’ union camera crew had walked off the set to protest the lack of nearby housing and previous alleged safety violations with the firearms on the set.
Instead of postponing filming to resolve the labor dispute, producers pushed forward, crew members alleged.
New Mexico prosecutors prevailed in a criminal case against the armorer, Hannah Gutierrez, in March 2024. She served more than a year in a state women’s prison for her involuntary manslaughter conviction before being released last year.
Baldwin faced a similar charge, but the case against him unraveled spectacularly.
On the second day of his July 2024 trial, his criminal defense attorneys — Luke Nikas and Alex Spiro — presented evidence that prosecutors and sheriff’s deputies withheld evidence that may have helped his defense . The judge was furious, setting Baldwin free.
Variety first reported on Friday’s court action.
Business
California’s gas prices push Uber and Lyft drivers off the road
The highest gas prices in the country are making it tougher for some gig drivers to make a living.
Gas prices have shot up amid the war in the Middle East. On average, California gas prices are the most expensive in the United States, according to data from the American Automobile Assn. The average price of regular gas in California is almost $6. The national average is a little above $4.
While Uber and Lyft drivers have concocted clever ways to cut gas consumption, they say that without some relief they will be forced to leave the ride-hailing business.
John Mejia was already struggling to make money as a part-time Lyft driver when soaring gas prices made his side hustle even harder.
“Unfortunately, it’s the economics of paying less to drivers and gas prices,” he said. “It actually is pulling people out of the business.”
Guests at The Westin St. Francis hotel get into an Uber.
(Jess Lynn Goss / For The Times)
Gig work offers drivers the freedom to work for themselves and more flexibility, but being independent contractors also means they must shoulder unexpected costs.
Ride-sharing companies say they’re trying to help, but drivers say the gas relief comes with caveats. For now, drivers say they’re being pickier about what rides they accept, cutting hours and are looking at other ways to make money.
Mejia, who started driving for Lyft more than a decade ago, said in his early days, he would sometimes make $400 in three hours. Now it takes 12 hours to rake in $200.
The San Francisco Bay Area consultant is an active member of the California Gig Workers Union, so he knows he isn’t alone. California has more than 800,000 gig rideshare drivers, according to the group, which is affiliated with the Service Employees International Union.
On social media sites such as Reddit and Facebook, gig workers have posted about how the higher gas prices are eating into their earnings. Among the tricks they are suggesting: reducing the number of times the ignition is turned on or off, avoiding traffic, working in specific neighborhoods and at times with high demand and switching to electric vehicles.
Gig drivers usually have only seconds to decide whether to accept a ride on the app, but they have become more strategic about which rides and deliveries they accept.
That means they are more likely to sit back in their cars and wait for higher fares for quick pick-up and drop-off.
“I highly recommend the ‘decline and recline’ strategy, rejecting unprofitable rides until a better one appears,” wrote Sergio Avedian, a driver, in the popular blog the Rideshare Guy.
Pedestrians cross the street in front of a Lyft and Uber driver on Wednesday. High gas prices have made it hard for gig drivers to make a living, cutting into their profits.
(Jess Lynn Goss / For The Times)
Uber, Lyft and other companies have unveiled several ways to help drivers save on gas.
Uber said drivers can get up to 15% cash back through May 26 with the Uber Pro card, a business debit Mastercard for drivers and couriers. Based on a worker’s tier, they can get up to $1 off per gallon of gas through Upside — an app that offers cash rewards — and up to 21 cents off per gallon of gas with Shell Fuel Rewards. The company also offers incentives for drivers who want to switch to electric vehicles.
“We know the price of gas is top of mind for many rideshare and delivery drivers across the country right now,” Uber said in a blog post about its gas savings efforts.
Lyft also said it’s expanding gas relief through May 26 because the company knows that the extra cost “hits hardest for drivers who depend on driving for their income.”
The company is offering more cash back, depending on the driver’s tier, for drivers who use a Lyft Direct business debit card to pay for gas at eligible gas stations. They can get an additional 14 cents per gallon off through Upside.
Drivers say the fine print on the offers dictates which card they use and where they fill up gas, making it difficult for them to save money.
“If I do the math, it’s ridiculous,” Mejia said. “They’re offering us nothing.”
Uber declined to comment, but pointed to its blog post about the gas relief efforts. Lyft also referenced the blog post and said “the gas savings were structured through rewards to maximize stackable opportunities.”
Guests at The Westin St. Francis hotel get into an Uber.
(Jess Lynn Goss / For The Times)
Gig workers have struggled with rising gas prices in the past.
In 2022, Lyft and Uber temporarily added a surcharge to their fares amid record-high gas prices following Russia’s invasion of Ukraine. This year, Uber is adding a fuel charge to its fares in Australia for roughly two months to offset the high cost of gas for drivers. Lyft said it hasn’t added a fuel charge in the U.S. or elsewhere.
Margarita Penalosa, who drives full time for Uber and Lyft in Los Angeles, started as a rideshare driver in 2017. Back then, gas was cheaper. She would easily hit her goal of making $300 in eight hours. Now she’s making just $250 after working as much as 14 hours.
Gas prices, she said, used to be less than $3 per gallon. Now some gas stations are charging more than $8 per gallon.
“Take out the gas. Take out the mileage from my car and maintenance. How much [do] I really make? Probably I get $11 for an hour,” she said.
Jonathan Tipton Meyers wants to spend fewer hours as a rideshare driver.
He already juggles multiple gigs even while driving for Uber and Lyft in Los Angeles. He’s a mobile notary and loan signing agent, a writer and performer.
Driving is “a very challenging, full-time job,” he said. “It’s very taxing and, of course, wages were just continually decreasing.”
John Mejia, a longtime Lyft and Uber driver, poses for a portrait before attending a meeting about unionizing gig drivers.
(Jess Lynn Goss / For The Times)
Even if oil continues to flow through the Strait of Hormuz, which Iran reopened Friday, it could take a while for gas prices to come down to earth, said Mark Zandi, the chief economist at Moody’s Analytics.
“There’s an old adage that prices rise like a rocket and fall like a feather,” he said. “I think that’ll apply.”
In the meantime, it will be survival of the fittest drivers. If enough of them decide to leave the apps, the ride-hailing companies could be forced to raise fares further to attract some back.
“Those who approach rideshare driving strategically, tracking expenses, choosing trips carefully, and optimizing efficiency are far more likely to weather periods of high gas prices,” wrote Avedian in the Rideshare Guy blog. “For everyone else, a spike at the pump can quickly turn rideshare driving from a side hustle into a money-losing venture.”
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