BIZCHINA / Weekly Roundup
Consumption levy a taxing issue
(chinadaily.com.cn)
Updated: 2006-03-24 06:36
The Ministry of Finance (MOF) and the State Administration of Taxation
(SAT) announced on Tuesday starting from April 1. The Chinese and foreign
media have given much attention to this reform. Here are excerpts of
comments from the press:
China Daily: China's decision to make sweeping changes to the current
consumption tax regime, which was announced on Tuesday and will take
effect starting April 1, is turning some public companies into investors'
darlings, while making life harder for others. ( )
Buyers of big cars will fork out more tax while those who opt to buy
smaller models will pay less from April 1. (Full text )
Tax changes mean little to most prices. (Full text)
A Chinese man eats noodles with disposable chopsticks at a restaurant in
Beijing Wednesday, March 22, 2006. China announced plans to impose a 5
percent consumption tax on disposable wooden chopsticks, in an effort to
discourage consumption of items that are blamed for wasting scarce timber
resources. China makes about 15 billion pairs of throwaway chopsticks a
year, consuming some 2 million cubic meters (71 million cubic feet) of
wood. The new tax takes effect on April 1. [AP]
Oriental Morning Post: The latest consumption tax reform is expected to
adjust consumption habits.
It helps regulate energy usage, protect environment by reducing the
exploitation of timber resources, and narrow the gap between the poor and
the rich by collecting a consumption tax on luxury items.
The taxation reform is a positive move. But some points should be
highlighted for better implementation.
The major purpose of consumption tax adjustment should not be increasing
fiscal incomes, as value-added tax should be the major source of fiscal
incomes. To emphasize this is to prevent blind enlargement of the
consumption tax regime in the future.
Consumption tax is a levy on consumption, not on production. The essence
of consumption tax is redistribution of a certain part of social wealth.
Government-led social wealth redistribution should be based on fairness.
The tax incomes should be used for special programmes. The aim of
consumption tax imposed on disposable wooden chopsticks is to protect
forest reserves. So the consumption tax incomes in this industry should
go back to the protection of forest resources.
If the input into protection remains the same after the implementation of
consumption tax, we can hardly call it a success to tax disposable
chopsticks.
The adjustment of consumption tax has just started. It is acceptable to
make future adjustments according to reality. But the correct principle
and the basic aim should not be forgotten.
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