Luxury Goods Should Not Be Reduced Tax?

More and more consumers in China are waiting to see the reduction of the luxury tariff.

The heated debate starts with a set of data.

The World Luxury Association's "blue book on the 2011 official report of the World Luxury Association" released in June 9th shows that Chinese consumers spent nearly $50 billion on luxury goods in Europe last year, 4 times that of the domestic market.

Mei Xinyu, a senior research fellow of the Ministry of Commerce, questioned the data being overstated. He pointed out that the total expenditure on tourism services in China last year was $54 billion 880 million, which includes all the contents of accommodation, pportation, shopping and so on.

According to the World Luxury Association report, it costs US $50 billion to buy luxuries in Europe alone, that is to say, China has outbound 57 million 386 thousand people last year, with an average cost of only more than 80 dollars for accommodation and play. This figure is obviously not reliable.

For this reason, experts believe that since the number is wrong, the argument that the "luxury consumption outflow" can be retained by lowering taxes can not hold water.

Gong Huiwen, a foreign tax research office of the taxation department of the State Administration of Taxation, supported the idea of Mei Xinyu with data.

Gong Huiwen pointed out that the price of luxury goods in China is actually 72% different from that in the United States, but this is not all the difference caused by tax rates.

The seminar, whether the luxury tariff will be adjusted in the year, experts from the participating ministries and commissions did not give a clear statement.

Liu Zuo, director of the taxation department of the State Administration of Taxation, said that the general tariff adjustment was at the end of the year.

Luxury goods levy more tax than ordinary consumer goods, which is a common practice in developing countries.

Of course, not all the experts attending the conference opposed the reduction of luxury tariffs.

Zhao Ping, director of the Consumer Economics Research Department of the Ministry of Commerce, believes that the so-called luxury tax reduction should be treated differently.

With the increase of income, some brands of cosmetics and bags have already entered the commodities that the middle class can afford, and are closely related to the middle-income urban residents. Such luxury goods should be drawn from the original range.

Gong Huiwen, a foreign tax research office of the tax department of the State Administration of Taxation, said that there is no luxury item in the tariff. It is necessary to define and subdivide the luxury goods and adjust the tax burden.

Domestic luxury products, such as cosmetics and fragrances, should be appropriately reduced in terms of import duties and excise duties. Domestic policies are also being studied.

For some high-end luxury goods, such as watches and jewellery, which are far away from most residents, they can not reduce taxes, and import tariffs can also be increased if necessary.

The high price of domestic luxury goods is an indisputable fact.

The survey of luxury goods prices at home and abroad in the one or two quarter of this year released by the World Luxury Association shows that the price differentiation of luxury goods at home and abroad is still huge, ranging from 50% to 350%.

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All sides argue against luxury tax reduction.

The import tariff of luxury goods has not dropped, and experts have heated debate at the seminar on China's luxury tariff.

Experts from the "no tax cuts" think that the benefits of luxury goods tax reduction are not as big as they are. The experts of the "tax reduction faction" said that in order to avoid consumption outflow, they should take the lead in reducing cosmetics, perfume and other luxuries related to people's lives.

Non tax cuts

Incorrect consumption tax is not equivalent to price reduction.

Mei Xinyu, senior research fellow of the Ministry of Commerce

Mei Xin Yu: first of all, I disagree with the data released in the June World Luxury Association's 2011 official report blue book released by the World Luxury Association. The report said that the amount of luxury goods purchased by Chinese tourists in Europe last year reached US $50 billion. This figure is extremely exaggerated. According to the China International Luxury balance table, last year, the total expenditure of Chinese tourism services abroad was US $54 billion 880 million, which includes all the contents of accommodation, pportation, shopping and so on.

According to the World Luxury Association report, it costs US $50 billion to buy luxuries in Europe alone, that is to say, China has outbound 57 million 386 thousand people last year, with an average cost of only more than 80 dollars for accommodation and play. This figure is obviously not reliable.

Since the number is wrong, the argument that the "luxury consumption outflow" can be retained on the basis of this figure can be retained by reducing taxes.

I think from data analysis, we must rely on reducing import tariffs on luxury goods and expanding domestic consumption market effectively.

I firmly oppose the reduction of import tariffs on luxury goods, on the grounds that even if tariffs are lowered, luxury goods may not be cut.

If I am a luxury goods operator and import tariffs have been cut down, I will never lower the selling price. I will only take advantage of this opportunity to reduce the tax to my pocket and never give up to consumers.

Because the consumer psychology of purchasing luxury goods now is to show their identity, not to ask for the best, but to ask for the most expensive. Why should the operator reduce the price?

Even if the tariff is lifted, the price difference still exists.

Gong Huiwen, foreign tax research office, Department of Taxation, State Administration of Taxation

Gong Huiwen: luxury goods from the dynamic level of the two concepts, the first is the popular luxury goods, one is the top luxury goods, people generally understand that low-grade and high-end luxury goods, I personally do not understand this distinction, since it is not the traditional concept of luxury, the concept of luxury, on this basis, we can be sure that before, luxury goods are not luxury now, this part of the tariff should be reduced, this is taken for granted. Our domestic consumption tax policy adjustment also takes into account this problem.

What is the tariff for high-end luxury goods in real sense?

I think we need to levy tariffs and impose high tariffs.

Whether it is levying tariffs or domestic consumption tax, levying high taxes on luxury goods, the two tax policies should be consistent, the domestic consumption tax with reduced tariffs should also be reduced, and how to levy taxes on the luxury goods should be considered from the overall tax. Second, these two policies should all be taxed high. Why?

These two taxes are mainly for two purposes. The first purpose is to regulate income distribution. Many experts have mentioned that luxury goods are aimed at the high income class. It is natural for them to collect high taxes. Second, it helps to guide the whole society to develop healthy and healthy consumption concepts. First of all, to say that from an individual perspective, everyone has the right to choose different grades of consumer goods. It is right to buy luxuries from an individual perspective. We can not blame it. There is a problem about how a society and a group should admire high-end consumer goods.

Lowering tariffs will not stimulate domestic demand, nor will it benefit the common people.

The price of luxury goods in China is actually 72% different from that in the United States, but this is not all the difference caused by tax rates.

Take the largest vehicle with the largest tax difference between China and the United States as an example. China's consumption tax is 25% and the United States is 2.5%. Even if the tax difference is deducted, how much can the price difference be narrowed?

That is to say, the difference between Chinese and international luxury goods is at the retail end, not the difference in tariff.

Even if tariff is abolished, the price difference still exists.

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No clear timetable for luxury tax cuts

Liu Zuo, director of the Taxation Research Institute of the State Administration of Taxation

Liu Zuo: there is no definite timetable for reducing the tax on luxury goods, but according to the time of tariff adjustment every year, even if there is a possibility of adjustment this year, at least it will have to wait until the end of the year.

For the reduction of luxury tariffs, the definition of luxury goods is the first thing to be solved.

The World Luxury Association defines luxury products according to the per capita monthly income of the first tier cities in a country. The price of a single product should be classified as luxury before the tariff and consumption tax is higher than the monthly income per capita in the first tier cities of the country.

China imports luxury goods in four taxes, one is import tariffs, two is value-added tax on imported goods, three is consumption tax, and four is vehicle purchase tax on imported cars.

In 2010, the value added tax and consumption tax collected by China in the import sector amounted to 10491 billion yuan, accounting for 14.3% of China's total tax revenue. The tariff of imports was 202 billion 800 million yuan, accounting for 2.8% of China's total tax revenue, amounting to 12519 billion yuan, accounting for 17.1% of the total national tax revenue.

The tax structure of a country is closely related to the level of economic development of the country. The tax structure of developing countries is mainly indirect tax, mainly value-added tax, consumption tax and tariff. China now levies taxes on luxuries and other imported goods, which is a manifestation of the reality of China's economic development.

Moreover, for a fair consideration, tax policies can not reduce taxes on the rich.

Support tax cuts

Lowering tariffs can stimulate the growth of domestic enterprises

Lai Shiping, Commissioner for trade promotion at Italy Embassy in China

Lai Shiping: if Europe and the United States enter the recession, then China will become the world's largest luxury consumer country in the next two years. The condition is to reduce import tariffs.

Some people think that higher tariffs will reduce the entry of foreign luxury brands, and then increase the number of people buying luxury brands.

And I think the brand of luxury goods is defined by the buyers themselves. If they like to buy luxury brands, even if they cannot buy them at home or the tariffs are too high, they will go abroad to buy, go to Paris, go to Milan, go to Rome...

In short, they will not buy Chinese luxury brands, so the more protectionism they are, the more they will buy abroad.

China is the largest automobile and furniture producer and exporter in the world. What is the problem?

The problem is that Chinese enterprises focus on quantity, because they contribute to the market according to quantity. What is the relationship between quantity and quality?

This is the crux of the problem. Local manufacturers are not doing enough to build brands, so they are afraid of fierce competition from foreign brands.

If overseas luxury goods are allowed to enter China, they can stimulate the growth of local enterprises in China.

For example, many people are fat, but they are not very strong. The entry of foreign companies is actually an example for these enterprises. They invest in design, they invest in the market, they are very strong, and learn from the experience of these foreign companies, Chinese companies can learn a lot.

Therefore, competition is very beneficial to Chinese enterprises.

Chinese companies should not only be fat, but also be strong enough to learn to compete.

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Tax reduction is a trend, but time is uncertain.

Zhao Ping, director of Consumer Economics Research Institute, Ministry of Commerce

Zhao Ping: luxury fever is the affirmation of China's reform and opening up, and luxury itself is a dynamic concept.

For example, the bicycle used to be a luxury item. Now the economy car is a walking tool. It used to be a luxury product. Now it is no longer a luxury item. It has become a necessity for people's life.

Therefore, the answer is not "black or white".

In the long run, tax reduction is a trend, but it does not mean that it will come down tomorrow.

With the improvement of the economic level, people's continuous pursuit of high quality life is an inevitable demand. Such commodities, I think, should be cut down from the long-term trend to meet the growing material and cultural needs of the people's group.

Luxury tariff should be adjusted hierarchically.

Song Li, Professor of China Institute of reform and development, Renmin University of China

Song Li: with the development of China's economy, it has entered an important stage of consumption upgrading.

The experience abroad is that when the per capita income reaches a certain level, there will be two trends of outbound tourism and large consumption of goods. For China, the "unfortunate" is that the growth of overseas travel and consumption has become one, and the growth of consumption capacity has not outlived domestic tourism and has become a domestic demand.

Without affecting domestic related industries, part of the luxury tax can be appropriately raised, some can remain unchanged, and some can be downgraded. For example, class a luxury tax can be appropriately raised, class B immovable and class C tariff reduced.

Avoid consumption outflow luxury goods should be classified tax reduction.

Ouyang Kun, chief representative of the World Luxury Association, China

Ouyang Kun: the World Luxury Association recommends a stratified adjustment of luxury tariffs. 85% of young consumers in China are willing to use foreign perfumes and cosmetics. These commodities have gradually become necessities, that is, they must be consumed.

Because of the large price gap at home and abroad, domestic consumers prefer to go abroad to buy, but in order to make up for the cost of air tickets and hotels, they should buy some bags to balance their expenses.

Therefore, in order to avoid the consumption outflow, the luxury goods that must be consumed such as perfume and cosmetics should be reduced taxes first.

In July, the major luxury brands came up with information about price increase: from July 1st, Cartire's 300 products rose all the way, with an average gain of 9%; Louis Vuitton averaged an increase of 6%, a black champagne bag price rose from 16 thousand yuan to 19 thousand yuan, and Chanel's classic women's bag rose from 30 thousand yuan to 37 thousand and 500 yuan, or more than 20%.

In addition, the price of Estee Lauder's products is generally raised by 5%~8%, of which 50 ml of instant moisturizing essence has risen from 880 yuan to 940 yuan, or 7%.

Whether or not the import tax is adjusted, high-end brands will take corresponding strategies to lock products in the high-end market.