The Ministry of Finance (MOF) and the State Administration of Taxation (SAT)
announced on Tuesday consumption tax adjustments 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. (Full text )
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)
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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]
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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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