Two Ministries Struggle To Cut Taxes On Luxury Goods &Nbsp, Involving Tens Of Billions Of Dollars In Consumption.

It involves billions of dollars in consumption and hundreds of billions of dollars.

In June 15th, Yao Jian, a spokesman for the Ministry of Commerce, said publicly that China will further reduce import tariffs, including tariffs on some medium and high grade commodities. This is the general trend and there is a consensus among various departments.

But only a few days later, finance ministry officials said they had not heard that the import tariffs on high-end consumer goods should be adjusted.

Nanfang Daily reporters interviewed officials from two ministries.

The Ministry of Commerce stressed that cosmetics, milk powder, clocks and watches, clothing products, imported bags, shoes and hats and other products all have tax reduction or tax exemption space.

However, the two ministries and commissions have not disclosed the time that the public is most concerned about.

It is understood that the Ministry of Commerce believes that rather than allowing luxury goods to be "tax avoidance" abroad, it is better to lower the tax rate so that consumption behavior can be generated in China. The Ministry of Finance believes that the foreign high-end brand marketing strategy is to sell high prices in China, and there will be no obvious reduction in tax cuts.

Jia Kang, director of the Financial Science Research Institute of the Ministry of finance, told the Nanfang Daily reporter that according to the Ministry of finance analysis, the price of foreign luxury brands is high and can be handled in other ways, such as the Islands tax rebate mode in Hainan.

"Since the Ministry of commerce is different from the Ministry of finance, I think we can select a number of commodities as a tax reduction pilot to see if it can affect its price."

Ministry of Commerce: lowering tariffs can keep consumption power at home.

The difference between the two ministries and commissions is the balance between the consumption of tens of billions of dollars per year and the tax revenue of hundreds of billions of dollars.

According to the Nanfang Daily reporter, the Ministry of Commerce began to reduce the comprehensive tax rate of luxury goods as early as 2009.

It is reported that the view came from a deputy minister in charge of foreign trade and economic cooperation, who witnessed the craziness of luxury goods abroad.

At the time of the international financial crisis, the state needed to expand domestic consumption, but it has yet to make progress.

He said with emotion to his staff members, "if these consumption can be generated in China, what kind of impetus will it bring to the domestic economy?" he believes that lowering the tax rate of luxury goods in the domestic market is the most direct way to retain the middle and high-end consumption.

After returning home, his views were approved by other leaders of the Ministry of Commerce, and the Ministry of Commerce launched relevant research.

However, the problem of reducing the comprehensive tax rate of luxury goods is not decided by the Ministry of Commerce.

People familiar with the matter said, "there are many ministries involved, the most direct one is the Ministry of Finance and the State Administration of Taxation, which is the state tax bag."

However, the Ministry of Commerce believes that although reducing the overall tax rate of luxury goods is reducing the national tax revenue, it promotes the development of the service industry, the driving force of consumption, and the benefits of tourism and employment driven by the luxury goods.

With the increasing number of Chinese people going abroad, the amount of consumption abroad will continue to rise.

"Rather than allowing these consumption spillovers, we should lower tax rates and keep consumption at home."

This view was cited by the head of the Ministry of Commerce many times in public.

Data show that Asian luxury goods consumption in the European market totaled 69 billion US dollars last year, of which Chinese people spend nearly 50 billion dollars, 4 times as much as the domestic market.

There were about 1 million people traveling to the United States in 2010, and the average amount of tax rebates per person was over $7000.

But the Treasury's consideration is understandable.

It is understood that, according to the current import and export tariff, imported perfume is subject to 10% tariffs, 17% value-added tax on imports and 30% consumption tax on imported goods. Import tariffs of some wines are as high as 65%, and 17% additional value added tax and 10% import duty on imported goods are required.

In addition, according to the relevant data of the Ministry of finance, import duty was about 202700000000 yuan last year, value-added tax and consumption tax were nearly 1 trillion and 50 billion yuan, and the two share accounted for 29.5% of the central fiscal revenue.

But it is worth noting that quite a few of them do not belong to the luxury goods ranks mentioned by the Ministry of Commerce.

Experts recommend that tax be taxed at different levels according to commodity prices.

Previously, Yao Jian has released a set of Statistics: business department survey shows that 20 kinds of high-end consumer goods, such as watches, bags, clothing, wine and electronic products, are clearly priced at home and abroad: the domestic market is about 45% higher than Hongkong, 51% higher than the United States, and 72% higher than France's five products.

When Yao Jian analyzed the reasons why luxury goods sold at a high price in China, he said that the comprehensive import tax rate of some brands was relatively high, which is indeed one of the reasons.

At present, the comprehensive tax burden of imports of high-end consumer goods in the mainland of China is usually composed of three components: import tariff, consumption tax and value added tax: import tariffs vary from 6.5%-18%, value-added tax is 17%, consumption tax is as high as 30%, and accumulative total needs to pay taxes of up to 60%.

It is understood that the World Luxury Association has suggested that the level of luxury goods should be lifted from price and tax rates, such as genuine luxury goods, watches, jewelry and top leather goods can be taxed unconditionally. Perfume and cosmetics that are related to the daily life of ordinary people, and high-end brand clothing should be appropriately set up at the price level and separately taxed according to the price level.

Ouyang Kun, President of the World Luxury Association, believes that if the tax system is taxed at different levels, the more expensive the price is, the higher the tax rate will be to prevent the brand from rising in China.

If we carry out a layered tax adjustment, such as separate taxes for more than ten thousand yuan and less than ten thousand yuan, let the brand choose to restrict the overall price growth through customs duties, so that the brand will match the product with the corresponding consumers. "Such a part of consumers will not have to go shopping in Hongkong or Europe."

In addition, Ouyang Kun pointed out that the scope of luxury tax collection in China is not very clear. Whether taxation is related to price or whether it is related to Chinese buying brand awareness is not clear.

"If we are related to price, we can tax the commodities at different levels. For example, we can reduce taxes and tax exemption on perfume and cosmetics, so that domestic prices will be synchronized with those in Europe and the United States, and the loss of consumption will be brought back to China."

Ouyang Kun said.

According to this criterion, the main areas of tax relief are concentrated in clothing, food, housing and banking.

From a broad perspective, daily chemicals, watches and clocks, clothing products, imported bags, shoes and hats and other products have room for tax reduction.

It is understood that cosmetics as an example, some cosmetics are defined as luxury goods, in the import process was imposed a 30% consumption tax.

But at present, most of the residents have the ability to consume cosmetics. The consumption tax as a guide to the consumption structure tax is decreasing, and the tax burden should be reduced or reduced accordingly.

In addition, for foreign milk powder, although there is no consumption tax, there is still up to 57% of the import tax. The tax on such products may be lowered after related research.