Luxury Customs Tariff Escalation &Nbsp; Two Ministries Deadlock Crux List Of Luxury Goods

Despite the denial from both sides, the outside world still tends to interpret the position on the two official websites of the Ministry of Finance and the Ministry of Commerce as a "mutual pinch" message on the issue of luxury tax reduction.

Just half a month ago, the spokesman of the Ministry of Commerce, Yao Jian, said that the further reduction of import tariffs, including some of the top and middle grade commodities, was the trend of the times. After all departments reached a basic consensus on this, the Ministry of Finance said that N did not hear this statement.

Not only that, but with the media articles published by the Ministry of Commerce on the proposal of lowering the import tax points to wheat, the article of the Ministry of Finance published on the front page, entitled "should not cancel or reduce the import consumption tax on luxury goods", said that levying taxes on imported luxury goods is a tax on the rich, which is undoubtedly conducive to social equity, and should not only be reduced but should be improved.

"The two ministries have so far failed to make progress because they have not yet defined the scope of luxury products, and are expected to introduce corresponding measures in October when they are clear."

Ouyang Kun, chief representative of China Representative Office of the World Luxury Association, told reporters.

The Ministry of Finance

"The Ministry of Commerce and the Ministry of Finance may submit a plan to expand imports in the near future to the State Council, including issues related to the reduction of import tariffs on luxury goods, and tax cuts are only a matter of time."

Yao Jian's position is in line with the views of the subordinate media and international business newspapers published on the official website of the Ministry of Commerce.

Liu Shangxi, deputy director of the Finance Research Institute of the Ministry of Finance (micro-blog), is regarded as the real attitude of the Ministry of finance.

In view of it, a nation's G DP has just reached 4000 US dollars, but its luxury consumption accounts for 1/4 of the world.

In the article posted on the official website of the Ministry of finance, it lists the negative effects that may be caused by the abolition of the tax on imported luxury goods. "On the one hand, it has aggravated unfair distribution of income. On the other hand, it is undoubtedly necessary to open the door to foreign products to directly impact the survival and development of the national industry."

Liu Shangxi stressed that the expansion of domestic demand now advocated is to reduce dependence on external markets, encourage domestic enterprises to produce more products, and tax reduction is the production of foreign products.

On the other hand, in order to promote consumption and increase imports, the Ministry of Commerce, which wants to lower the tax rate of luxury goods, is on the other hand considering the balance of distribution, hoping to maintain or even raise tariffs, the Ministry of finance, which has called for years of tax cuts, has not been effective.

According to the press, the adjustment of tariff of imported products can not be decided by a certain ministries and commissions. It needs to be considered and approved by the plenary session of the Customs Tariff Commission of the State Council and submitted to the State Council for approval before it can be implemented.

According to the current institutional setup, the director of the State Council Tariff Commission consists of 11 ministries, including the Ministry of finance, the development and Reform Commission, and the Ministry of Commerce.

Yang Zhiyong, a researcher at the Institute of Finance and trade of the Chinese Academy of Social Sciences (micro-blog), also said that, from an administrative point of view, the Ministry of finance is undoubtedly more authoritative on tariff issues.

"The two article is not a formal document, but an attitude of experts from different departments. It can not be said that the two departments do not agree."

Zhang Xiaoji, a researcher at the Ministry of Foreign Economic Research of the State Council Development Research Center, said that lowering import tariffs would directly reduce revenue, which is a more prudent reason for the Ministry of finance.

According to the Ministry of finance data, the value added tax, consumption tax and tariff increase in 2010 were 35.7% and 36.6% respectively, and the proportion of revenue increased by 30% over the whole year.

Adjusting the category of luxury goods can achieve indirect tax reduction.

"The Ministry of Commerce and the financial sector do not look at the problem from the perspective of import and national income and social balance. There are certain reasons for the two voices."

Ouyang Kun said, but the key is that we should first figure out what luxury goods are and what is not. We must consider reducing taxes for items that have already entered necessities.

"Perfume may be a luxury item 10 years ago, but it's hard to say in 10 years, not a stick."

Lin Shuanglin, director of the Department of finance, School of economics, Peking University, and Zhao Ping, deputy director of the Department of consumer economics, Research Institute of the Ministry of Commerce, also believe that

Reporters learned that at present, domestic import tariffs vary from 6.5%-18%, value-added tax to 17% and consumption tax to 30%.

In the field of cosmetics, different tax rates have been applied. For example, the tariffs for lip, eye and powder products are 10%, nail oil and other nail based cosmetics are 15%, while the tariff of skin care products is 16% higher, while the consumption tax is only 8%. Therefore, the overall tax rate is the lowest in cosmetics.

Even so, it is still as high as 41%, far from the expectation that consumers will protect skin care products from the luxury category and reduce the consumption tax.

In the view of some industry experts, in addition to the indirect tax reduction through adjusting the luxury sector, at least the luxury can be pulled from the price and tax rate.

"Watches, jewellery, top-grade leather goods can be taxed unconditionally. Perfume, cosmetics, clothing and so on should be appropriately opened up the price level, and they should be taxed separately."

Ouyang Kun said that if the tax system is implemented in different levels, the more expensive the price is, the higher the tax rate will be. It will also help prevent the malignant increase of brand in China and stimulate the return of consumers.

In fact, the change in tax cuts may not be as direct as the price of imported luxury goods, but it may change the structure of luxury goods at home.

Under the high tariffs, many international brands do not put all their products into China. Instead, they choose to sell some of their high-end products to Europe and the United States, while avoiding high tariffs in China.

At the same time, a large number of domestic processing trade must be exported according to the current policies. After processing abroad, several times the price of foreign trade, and then repurchased by Chinese tourists, further causing the problem of luxury goods being cheap and expensive.

But whether or not to reduce taxes can fix all problems including consumer psychology, and there is no definite answer.