China’s central government will directly collect trillions of yuan in annual revenue from land sales and other non-tax incomes that previously went to local authorities, in a bid to ease a possible financial strain.

The Ministry of Finance and three other central government departments issued a notice last Friday stating that four categories of income originally collected by provincial and municipal authorities would now go to the central government, which officials described as taxation reform.

These include revenues from land sale and fees imposed on the use of mines, maritime resources and uninhabited islands. The State Taxation Administration, a central government department, would be responsible for collection, according to the notice.

The new measure would first be launched in four provinces including Hebei, Zhejiang, Anhui and Yunnan, plus two cities, Shanghai and Qingdao, and the Inner Mongolia autonomous region on July 1. It would be fully implemented across China on Jan. 1 next year, the notice said.

Revenues from local land sales, estimated at 8.4 trillion yuan (about US$1.31 trillion) last year, have been a major source of income for many local governments, according to an overseas-based observer who runs a YouTube channel on China’s economy.

A woman who lives in Nanjing and is familiar with real estate transactions said the new measure appeared to be part of President Xi Jinping’s plan to tighten his control of local affairs. Local officials usually received kickbacks from developers in real estate projects and they would lose a major source of income, she said.

The loss would prompt local officials to think of other ways to generate income, such as redevelopment of old towns, creating further conflicts between the public and governments, said Beijing-based dissident Ji Feng.

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