China's fiscal revenue rose 1.7 percent year on year to 989.4 billion yuan (224 billion U.S. dollars) in August, data from the Ministry of Finance showed Tuesday.
Revenue growth was down from the 3.3-percent gain posted for July.
The ministry attributed the slowdown to the high base in the same period last year and more levy cuts following the shift from business tax to VAT.
China's economy expanded 6.7 percent year on year in the second quarter, stable from the first quarter.
In the face of continued economic headwinds, China has made supply-side reform an economic priority, and tax cuts to lower costs for business are a major policy option, putting more pressure on revenue growth.
The central government collected 479.7 billion yuan in fiscal revenue in August, up 2.5 percent year on year, while local governments saw fiscal revenue rise 1 percent to 509.7 billion yuan.
In the first eight months, fiscal revenue rose 6 percent year on year to 11 trillion yuan
In August, fiscal spending gained 10.3 percent to hit 1.4 trillion yuan, bringing expenditures for the January-August period to 11.6 trillion yuan, up 12.7 percent year on year.
To cushion the blow from sluggish revenue growth and balance the need for proactive fiscal policies to support growth, China plans to increase its deficit-to-GDP ratio to 3 percent this year from 2.3 percent last year.