Thoughts On Lowering Taxes And Lowering Prices Of Luxury Goods

Whether the import tariffs of high-grade commodities and luxury goods should be cut down? The debate on this topic is still continuing. The Ministry of Commerce and the Ministry of finance have insisted on each other. There is still no sign of agreement, and the policy is going to be confused.

Prior to this interview, experts from the Ministry of Commerce said that lowering the import link tax of medium and high grade commodities was conducive to reducing the difference between domestic and foreign prices, pferring the overseas purchasing power to the domestic and improving people's living; the Ministry of finance experts insisted that the importer's marketing strategy decided that lowering taxes could not lower the price of luxury goods, but increased the profits of foreign importers and impacted domestic enterprises at the same time.

How much can the import link tax account for the cost of medium and high grade commodities? Can tax reduction be reduced? Reporters found in the survey that the tax burden of import links is not the most important factor leading to the domestic and foreign price differences, and the price reduction brought about by tax reduction is limited.

For medium and high grade goods and

Tax reduction "consensus" sparked controversy

The Ministry of Commerce's "reduction of import tariffs on medium and high grade goods" has become a "consensus" statement denied by the Ministry of finance officials, and the two sector has been divided openly.

In June 9th, the World Luxury Association released the latest report in 2011. The total consumption of luxury goods in mainland China last year reached 10 billion 700 million US dollars, accounting for 1/4 of the global share, and it is estimated that China's luxury consumption will exceed 14 billion 600 million dollars next year, surpassing Japan as the world's largest luxury consumer.

A week after the release of the report, Yao Jian, a spokesman for the Ministry of Commerce, said publicly that China will further reduce its value.

Before the release of the report, there were media reports that China's luxury consumption was staggering and its outflow was very serious.

Chen Deming, Minister of Commerce, pointed out at a high-level forum in March that China's tariff is one of the reasons that some famous brand products are cheap abroad.

Yao Jian also said that reducing import tariffs on consumer goods is aimed at attracting overseas luxury consumption.

The interpretation of luxury tariffs will soon be lowered.

Some media have even reported that cosmetics, tobacco and other commodities will go ahead, and the reduction of import tariffs will be set at 2%-15%.

A week later, a news report showed that the "consensus" of tax reduction did not seem to be achieved, and the import tariff reduction was still on the road.

In June 21st, Caixin quoted the relevant officials of the Ministry of finance as saying that it had not heard that the import tariff of high-end consumer goods should be adjusted, and the statement of cosmetics, tobacco and alcohol should be denied explicitly.

At this point, the two sector's differences in the import tax on luxury goods have been made public.

Two sector official media wrestling

The Ministry of Commerce and the media of the Ministry of Finance issued their own articles respectively, and quoted experts' views respectively to explain the pros and cons of "down" and "no drop".

The Ministry of Finance and the Ministry of commerce did not respond positively to the differences, but since then, the public speeches of the official media and researchers showed that two ministries and commissions are secretly struggling for the luxury tariff.

In June 30th, the official website of the Ministry of Finance published an article from its subordinate media, saying that the import consumption tax on luxury goods should not be abolished but should be further strengthened.

The article quoted Liu Shangxi, deputy director of the Institute of Fiscal Science of the Ministry of finance, as saying that the levy on imported luxury goods

It is worth noting that the Ministry of Commerce recently issued an article in line with the Treasury's opinion on its official website.

In June 24th, the official website of the Ministry of Commerce published a report on its international media, which cited the experts' view that with the improvement of people's living standards, the import link tax should be cut down.

According to the article, the high import tax is considered by the industry as an important reason for the high price of overseas high-grade commodities in China. The high price difference between domestic and foreign countries has caused a large number of consumption to move outward.

As China's luxury market continues to expand, the tax rate on imported luxury goods is the highest in the world.

The high tax burden leads to the high price difference between home and abroad, which leads to the prevailing trend of buying and selling, and the purchase is pferred overseas.

According to the analysis of the insiders, two articles were published on the official website of two ministries and commissions, and the original provenance is also a media with their respective official backgrounds. It can be regarded as a footnote by two ministries and commissions on whether the import tariff of luxury goods has declined.

Can tax cuts be reduced?

Whether the reduction of import link tax will cause price declines? One side considers that supply and demand is the decisive factor, and the other side thinks that it will decline to a certain extent.

After the articles on the official website have been disagreed with each other, the experts from the Ministry of Finance and the Ministry of Commerce separately interviewed this newspaper, openly debating the definition of luxury goods and the differences between the two sides. The core of the debate is whether the import tax on high-end goods and luxury goods should be cut down.

Liu Shangxi, deputy director of the Financial Research Institute of the Ministry of finance, said that the reduction or liberalization of the import link tax for medium and high grade commodities is like drinking poison to quench thirst, which runs counter to the strategy of expanding domestic demand and changing the mode of economic development.

Zhao Ping, deputy director of the Consumer Economics Research Institute of the Ministry of Commerce, believes that the consumption of more imported goods to raise the living standard of the ordinary people and improve people's livelihood is one of the most important goals of economic development. In this case, it is necessary to further reduce the import tax.

The two sides have different views on whether or not tax cuts can reduce prices.

Liu Shangxi pointed out that the prices of imported goods in China are affected by distribution costs, financial costs and logistics costs. The most important thing is that supply and demand depend on supply and demand. As long as the domestic pursuit of foreign luxury goods is not diminished, even if the tax cuts are even lifted, the price of domestic luxury goods is also hard to come down, and the profits of importers will expand accordingly.

Zhao Ping does not agree with this view. She believes that the import link tax is a very important factor in the pricing of domestic consumer goods. After lowering or abolition of the import link tax, the price will drop to a certain extent.

Zhang Xiaoji, Minister of the Ministry of Foreign Economic Research of the State Council Development Research Center, told reporters that the differences between the Ministry of Commerce and the Ministry of finance were mainly their respective positions.

The Ministry of commerce is in charge of trade and domestic consumption, and the scale of trade after tax reduction has expanded and the domestic market is relatively more active. The Ministry of Finance advocates that no tax reduction is mainly aimed at reducing revenue and shouldering the responsibility of guiding consumption.

The import tax ratio is negligible.

The proportion of import tax in the price of medium and high grade commodities is very small.

According to the industry, price fixing of brand manufacturers is the key to price.

"Which is so complicated, the tax is reduced a bit, people buy things cheaper, I feel pretty good."

Chen Jiagui, former vice president of the Chinese Academy of Social Sciences, said.

Although it is clear that the price of high-grade and imported consumer goods will drop to a certain extent after tax reduction, Zhao Ping also admits that this does not mean that commodity prices have hit half off.

So how much can we reduce or even abolish the import tax? What percentage of the price of the import link is in the luxury market? This reporter has calculated that the tax burden of the import links is not the most important factor leading to the difference between the domestic and foreign markets. The import tax revenue is very small in the price of the medium and high grade commodities, and the price reduction brought by the tax reduction may be very limited.

The import tax includes three items, that is, import duties, value-added tax in import links and consumption tax in import links.

The import tariffs of medium and high grade consumer goods are mostly between 10%-25%. Individual varieties such as liquor may reach 65%, value-added tax of import links is 17%; besides, the consumption tax of 10%-40% is also required for high-end consumer goods.

In 2010, the central accounts report showed that last year, the central public finance revenue was 4 trillion and 250 billion, of which three of the import tax revenue amounted to 1 trillion and 250 billion, accounting for nearly 1/3.

Because the import link tax rate is very high, and the total tax revenue of the import link accounts for a large proportion of the central fiscal revenue, many people think that a large part of the high price of medium and high grade consumer goods is caused by the import link tax.

In fact, the import tax of luxury goods, especially luxury goods, is negligible compared to the terminal price.

Insiders told reporters that brand manufacturers' pricing of different markets is the most important factor in the high price of luxury goods.