Red Wine Industry To Change From "Industry" To "Agriculture"?

With the gradual control of Xinguan pneumonia in China, the recovery of consumption scenarios and the changes of internal and external environment, Zhou Hongjiang, chairman of Changyu shares (000869. SZ), a leading wine enterprise in China, clearly felt that the life of enterprises this year was better than that of previous years. "Our first quarter results began to grow again." At the just concluded national spring sugar and wine fair, he said in response to a reporter's question from the 21st century economic report.

What is more gratifying to Zhou Hongjiang is that this is the fourth time that he proposed to adjust or even cancel the wine tax at the national two sessions. The "good voice of Chinese wine" issued by the only NPC Representative of the wine industry has finally attracted the attention of the Ministry of finance.

"I put forward suggestions in the morning and got feedback from the Ministry of finance at noon." At a wine lunch with Chinese dishes, he told the 21st century economic report that the Ministry of finance will carry out a lot of research into the wine industry.

On April 9, the guidelines for the 14th five year plan of China liquor industry were released at the China International Liquor Expo held in Luzhou. Song Shuyu, chairman of China Wine Association, said that during the "14th five year plan" period, China Liquor Industry Association focused on industrial policies and put forward suggestions: cancel consumption tax on Chinese wine and reduce value-added tax. Industrial policy has great influence on the future development of Chinese wine.

However, the adjustment of wine consumption tax will not be achieved overnight. The 21st century economic reporter has learned from many interviews in recent days that it has been five years since the proposal of NPC deputies entered the key supervision procedures and the Ministry of finance has conducted research. The consumption tax law of the people's Republic of China (Draft for comments), which is related to the adjustment of consumption tax, has not been formally legislated since it was released for comments at the end of 2019. It has been reported in the industry that the eastern foot of Helan in Ningxia will carry out a pilot project of wine consumption tax, and the boots have not landed.

Wine consumption tax rate is 10%. Directly abolish or reduce tax rate? According to the different product price segment classification levy, or will the collection link from the production end to the wholesale, retail link? Will the cancellation of wine consumption tax lead to the adjustment of consumption tax of other wine types?

On March 10, a staff member of the consumption tax department of the State Administration of Taxation called in a reporter from the 21st century economic report and said that the consumption tax law was promoted by the Ministry of Finance and was still in the process. Wine consumption tax adjustment has not made substantial progress.

Wine consumption tax rate unchanged for 27 years

Consumption tax is a new kind of tax set up in the circulation tax in the tax system reform of China in 1994. Its financial function and regulation function are more prominent.

According to the "Provisional Regulations on consumption tax" and its implementation rules, the taxpayers of consumption tax are the units and individuals who produce, entrust to process and import taxable consumer goods within the territory of the people's Republic of China, and only pay in the production, entrusted processing and import of taxable consumer goods; the proportion tax rate and fixed rate tax rate are mainly adopted, and the scope of collection mainly includes 11 tax items such as tobacco, alcohol and alcohol. Some tax items, such as tobacco, wine, alcohol and cars, are further divided into several subheadings. Among them, wine and alcohol set up other wine subheadings, and wine was included in the scope of consumption tax, and the proportional tax rate was 10%.

In order to avoid double taxation, the State Administration of Taxation issued the measures for the administration of wine consumption tax (for Trial Implementation) in 2006. According to the measures, the consumption tax rate of wine is still 10%, and the consumption tax of imported wine can be offset by the consumption tax already paid in the import link; the management of "wine purchase certificate" shall be implemented for the sales of wine between the units or individuals engaged in wine production in China, and the buyer shall apply to the competent tax authority for the certificate before purchasing, and the Seller shall submit the refund copy of the certificate to the owner The tax authorities shall apply for refund of consumption tax already paid.

In November 2014, the State Council issued the "decision on the cancellation and adjustment of a number of administrative examination and approval items" to cancel the "examination and approval of wine consumption tax rebate". In order to further reduce the tax burden, in 2015, the State Administration of Taxation revised the measures for the administration of wine consumption tax (for Trial Implementation), abolished the examination and approval management mode of refund of wine consumption tax with "wine purchase certificate", and replaced it with the deduction method to solve the problem of repeated taxation of wine consumption tax.

Article 4 of the revised Trial Measures stipulates that if a taxpayer purchases or imports wine from a wine production enterprise to continuously produce taxable wine, it is allowed to deduct the consumption tax of the consumed taxable wine from the taxable amount of wine consumption tax.

This means that the consumption tax of imported wine in China can be offset by the consumption tax already paid in the import link. The consumption tax rate of 10% is mainly levied on Chinese wine producers without deduction.

Wine consumption tax has been levied for 27 years. According to Huo Xingsan, Secretary General of wine branch of China Wine Industry Association, with the improvement of people's income and consumption level, wine has changed from high consumption goods to daily drinking goods, and the wine consumption tax originally used to regulate consumption behavior should be abolished.

As early as 2019, Guo Cuimei, head of the accounting department of Yantai Changyu Group Co., Ltd., wrote in the Journal of China chief accountant that wine consumption tax has not undergone major adjustment since its establishment. In the face of an increasing variety of wine products, wine consumption tax plays a very small role in guiding consumption.

She believes that the tax rate of consumption tax can be diversified and refined, so as to guide people to consume and increase national financial revenue. Specific considerations: set different consumption tax rates according to different wine price ranges to regulate consumption; for low-end wine, considering the cancellation of consumption tax when the effect of adjusting consumption and increasing financial revenue is not obvious, so as to improve the efficiency of enterprise capital utilization and promote the development of grape wine industry.

Enterprise crisis under the epidemic situation

"For wine production enterprises, consumption tax accounts for nearly 1 / 3 of the total tax burden of enterprises, which has a considerable impact." Zhou Hongjiang once again submitted the "proposal on Abolishing wine consumption tax and revitalizing the wine industry" submitted by Zhou Hongjiang at the two sessions of the National People's Congress this year. He wrote that the wine industry has always been supported by national industrial policies, and enterprises still need the support of fiscal and tax policies. The cancellation of wine consumption tax will make domestic wine enterprises put down their burden, especially in the period of epidemic, which will greatly alleviate the crisis of wine enterprises.

What is the impact of consumption tax on corporate performance?

According to the annual report of Changyu, in 2018 and 2019, the company's taxes and surcharges were 268 million yuan and 276 million yuan respectively, accounting for about 5% of the current year's revenue. Among them, the consumption tax was 157 million yuan in 2018 and 159 million yuan in 2019, accounting for 56.8% and 59% of the tax and surcharges of that year, showing an upward trend. Due to the export of products, in 2018 and 2019, the amount of consumption tax and value-added tax paid by the company to enjoy export tax rebate is not much, which is 6.27 million yuan and 8.9 million yuan respectively.

In 2018 and 2019, the net profit of Changyu was 1 billion yuan and 1.13 billion yuan respectively, with a year-on-year growth rate of 8%. Once the consumption tax is cancelled, the company's profit will increase to 1.289 billion yuan in 2019, with a year-on-year growth rate of nearly 30%. According to the 2020 performance forecast released by Changyu, the company's profit was 460 million yuan to 570 million yuan last year, down 59% - 50% year on year. Once the consumption tax of more than 100 million yuan is abolished, the decline of net profit will be greatly reduced.

In mid March, Yu Qingquan, general manager and chief winemaker of COFCO Great Wall Sanggan winery, told reporters in the 21st century economic report that it was also the enterprise's wish to cancel the consumption tax. However, there are few deputies to the National People's Congress and CPPCC members in the wine industry, so the voice is weak.

Zhou Hongjiang pointed out that domestic wine enterprises and foreign enterprises are in an unequal competitive position. High tax burden has increased the burden of domestic enterprises and affected the competitiveness of products. From the international environment, wine consumption tax is not levied in many countries, even if the national tax rate is low. For example, Chile imposes 19% value-added tax on wine enterprises, 1.5% domestic sales consumption tax, 19.6% value-added tax in France, and 10% commodity and service tax in Australia, so export wine does not have to pay.

He further said that after China's accession to the WTO, the wine tariff has been reduced from 63% to 14%, and zero tariff has been implemented for wine imported from New Zealand and Chile. Australian wine imports will be reduced to zero tariff in 2019. The domestic consumption tax of imported wine has obvious advantages in terms of price after deducting the domestic consumption tax of imported wine, and its market share in China has increased year by year, from 32% in 2015 to about 60% in 2020. The living space of domestic wine is greatly squeezed and in a weak position.

In this regard, wine marketing expert Wang Dehui said in an interview with the 21st century economic report that no matter who it is, the tax policy has a great impact on the market share of enterprises.

After the Sino-U.S. trade war, after several rounds of anti-tariff increases, the comprehensive tax rate of American bottled wine exports to China is as high as 90%, which puts great pressure on American wine importers to become the Chinese market. China has imposed anti-dumping deposit and anti-dumping duty on Australian wine imports. Now the import cost of Australian wine is quite high, so it can only sell middle and high-end products. Looking for other products to supplement or even give up the country's products has become the choice of many wine merchants.

Although the United States and Australia have given up part of the market, many wine importing countries still implement tariff preference and consumption tax credit, and share the cake with domestic wine enterprises. "This year, after the signing of the China EU investment agreement, it will benefit the wine companies in Europe in disguise. Both sides should provide services under the condition of market-oriented equivalence, which is conducive to more European wine entering China. " Wang Dehui said.

Feng Qing, the owner of Ningxia leirenshou winery, told the 21st century economic reporter that it seems that Australia's wine has given up about 40% of its market share after being subject to anti-dumping duties, but in fact, domestic wine can't share so much among the many alternative competition relations of wine. Because of the same quality products, because the domestic wine consumption tax has not been cancelled, the total operating cost is 10% more than that of other countries, resulting in the decline of core competitiveness. The increase of 10% cost will enlarge the cost input in the market by 10-20 times.

He said that compared with electronic products, the purchase demand of wine in China is not so strong. As a niche product, it is more difficult to grow and sell wine, and the market cost is higher.

From this point of view, the unchanged consumption tax rate is an important factor that Chinese wine enterprises are in a disadvantageous position compared with imported wine enterprises.

Wine consumption tax to be abolished

Is there an egg under the nest? It is because wine has not yet been popularized in China, and the consumption scene relies heavily on catering and other crowd gathering channels, and the window of family consumption has not been opened. Under the epidemic situation, the whole wine industry in China has declined most severely in the beverage industry.

According to the data of the National Bureau of statistics, last year, the total wine production of wine production enterprises above designated scale in China reached 410000 kiloliters, down 6% year on year. There were 130 wine enterprises above the designated scale, with a loss area of 30%, with a cumulative loss of 440 million yuan, a year-on-year increase of 177%. Last year, the wine enterprises above the designated size achieved a total sales revenue of 10 billion yuan, a year-on-year decrease of 30%, and a total profit of 259 million yuan, a decrease of 74% compared with the same period of last year.

"The whole wine industry is facing a very serious situation, which has reached the critical point of life and death. If we continue to develop in this way, there may be a wave of bankruptcy." Zhou Hongjiang said in a proposal submitted to the NPC and CPPCC.

The voice of abolishing wine consumption tax and revitalizing China's wine industry has been ringing for many years in many major wine producing areas in China.

On March 15, Zhang Xu, deputy director of Yantai grape and wine industry development service center, recalled to the 21st century economic reporter by telephone. As early as 2016, relevant persons in charge of the China Wine Association and the development research center of the State Council went to Yantai wine production area for investigation. The production area proposed to cancel the wine consumption tax and include wine from industrial products into the deep processing range of agricultural products.

Ningxia wine producing area, which takes wine as the first industry development, appeals at the two sessions every year. At the two sessions of the National People's Congress in 2017, Zhang Shouzhi, then vice chairman of the Ningxia Hui Autonomous Region Political Consultative Conference and chairman of the Ningxia Committee of the National People's revolution, and Zhu Yilong, vice chairman of the Chinese Federation of overseas Chinese, jointly proposed that the state should include wine in the tax category of agricultural products, so as to reduce production costs and enhance market competitiveness. During the two sessions in 2019, Cui Bo, then member of the National Committee of the Chinese people's Political Consultative Conference and chairman of the Ningxia Hui Autonomous Region CPPCC, proposed to gradually abolish the consumption tax of 10% and further reduce the value-added tax rate, so as to promote the rapid and healthy development of China's wine industry. He Xiaoyong, member of the National Committee of the Chinese people's Political Consultative Conference and chairman of Ningxia Hui Autonomous Region Federation of industry and commerce, proposed to further support the development of wine industry in western underdeveloped areas and reduce the cost of domestic wine tax burden.

On March 12, the responsible person of Wuzhong agricultural and rural Bureau of Ningxia responded to the reporter of 21st century economic report that Ningxia would take the lead in implementing the pilot reform of consumption tax. "Only when the central government has issued a clear policy can we do so." He said.

Chen Chunping, deputy to the National People's Congress and Secretary of the Party group and director of the Finance Department of Ningxia Hui Autonomous Region, suggested that the wine industry at the eastern foot of Helan Mountain in Ningxia should be included in the scope of the central government's agricultural development support, and should be given priority support in arranging key projects such as industrial clusters and agricultural modern industrial parks.

The adjustment of consumption tax is silent for the time being, so Ningxia production areas have to change their ideas.

Wine industry is needed for Rural Revitalization

Chen Wenwei is the vice president of Ningxia KAISHILI Industrial Co., Ltd., and his hair is gray. On April 9, he told the 21st century economic reporter that he had been planting grapes for 19 years from Guangdong, thousands of miles away, to the eastern foot of Helan Mountain in Ningxia.

As the first winery of foreign capital entering hongsipao, Wuzhong City, Chen Wenwei and his team rented 50000 mu of desert grape planting in Hongsibao district. Up to now, he has led a group of local farmers to dig gravel with their hands and shovels, bury cow dung, sheep manure and straw, dig ditches for water and plant grapes, and the first batch of grapes will bear fruit in 2007, and the first batch of wine will be on the market two years later. In 2019, "2015 myth dry red" brewed by kessley won the highest award of the 11th golden cup award.

From no water, no electricity and no road to wine, the wine was listed in the seventh batch of poverty alleviation products list of the National Poverty Alleviation Office. Chen Wenwei witnessed that the former Xihaigu residents who were "bitter and barren in the world" went to work from burning kerosene lamps to driving motorcycles and cars. Over the past decade, more than 10000 farmers have joined their vineyards, and kessley has paid more than 80 million yuan to migrant workers.

Located in Zhuqiao Town, Laizhou, Yantai, Changyu shares rented a 6000 mu grape base through the transfer of farmers' land. The local farmers were employed by technical personnel to grow grapes, involving 16 surrounding villages. In the past seven or eight years of grape planting, there are no more poor people in five poor villages, and the per capita income has increased by more than 10000 yuan per year.

According to the summary report on poverty alleviation sent by Wuzhong agricultural and rural bureau to 21st century economic reporter, since 2016, 8686 mu of land has been transferred to cultivate wine grape. In the past five years, the total number of workers working nearby the wine base has reached 5067 (including 3346 filing households). At the same time, the migrant workers engaged in grape tending, management and protection, picking, with an average annual income of about 18000 yuan.

Zhou Hongjiang also told the 21st century economic reporter that Changyu shares has set up 200000 Mu grape bases in six major domestic production areas, such as Xinjiang, Ningxia and Yantai, adopting the mode of "company + cooperative + farmers", bringing nearly 800 million yuan of income to fruit farmers in China every year, and driving tens of thousands of farmers to get rid of poverty and become rich.

"Fertile land often can't make good wine. It needs hilly and barren land. Especially in Xinjiang, Ningxia and Gansu in recent years, it has played a very important role in poverty alleviation of local farmers." Duan Changqing, a professor at the school of food science and nutrition engineering of China Agricultural University, told reporters in the 21st century economic report by telephone that in order to effectively solve the problems of agriculture, rural areas and farmers and help poverty-stricken areas get rid of poverty and become rich, the Key Laboratory of wine processing of the Ministry of agriculture and rural areas has become one of the key professional laboratories built during the 13th Five Year Plan period.

Based on the close relationship between wine and agriculture, Huo Xingsan, Secretary General of wine branch of China Wine Association, proposed to cancel wine consumption tax and treat wine industry as an agricultural industry. Wine made from domestic grapes will be included in the scope of primary processing of agricultural products enjoying preferential policies of enterprise income tax, and enterprise income tax will be exempted or reduced The preferential policy of value-added tax on Grade-A agricultural products will reduce the tax rate from 13% to 9%, and accurately support the domestic wine industry chain.

Huo Xingsan told the 21st century economic report that the major wine producing countries in the world list wine as agricultural products and enjoy agricultural product subsidies and tax policies. They not only have a low tax burden, but also give government subsidies directly or indirectly, including agricultural machinery subsidies and planting subsidies.

In February this year, the No.1 document of the CPC Central Committee and the State Council issued the "opinions on accelerating the modernization of agriculture and rural areas". After the task of poverty alleviation is completed, Rural Revitalization includes rural revitalization, talent, culture, ecology and organizational revitalization.

"The wine industry connects agriculture, light industry and other industries in the way of product processing, and extends to the lower end of the industrial chain, forming a unique mode of integrated development of primary, secondary and tertiary industries. From grape planting, wine processing and sales, and then to sightseeing in wine gardens, a bottle of wine can greatly promote the development of supporting industries in multiple links. " Zhou Hongjiang said that the grape and wine themed cultural tourism route from east to West constructed by Changyu shares has annual tourism revenue of more than 100 million yuan.

"Wine industry can also systematically improve farmers' skills and promote the realization of agricultural modernization." He said that he proposed to increase investment in scientific research, actively screen and cultivate fine wine grape varieties suitable for the planting conditions in China's main production areas, establish a sound three-level breeding system for improved varieties and seedlings, simplify the procedures and conditions for introducing foreign excellent varieties, strengthen the research and development of planting supporting technologies, realize the organic combination of improved varieties and good methods, and vigorously develop and popularize automatic vine burying machines, unearthed machines and harvesting machines Picking machine, pruning machine, plant protection equipment and so on, reduce the grape production cost.

Feng Qing said that 100% of dry wine is made from grapes, which is different from the brewing method of pre blending and blended wine. Although it contains alcohol, it is more appropriate to include wine in the range of agricultural products as a result of deep processing of agricultural and sideline products.

According to the reporter of the 21st century economic report, although the consumption tax law has not yet been promulgated, the existing consumption tax rate announced in its draft is not fixed by iron plate. The State Council may adjust the consumption tax rate according to economic development, industrial policies, industry development and changes in residents' consumption level.

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