Pre­ma­ture tax hike could hurt Chi­nese con­sumer spend­ing

China Daily (Canada) - - LIFE -

You may call it a move for fairer tax­a­tion. Youmay call it a move to fa­cil­i­tate trade. But you can­not sell it as a boon for Chi­nese con­sumers, be­cause once the tax rules on on­line re­tail goods are changed on April 8, Chi­nese on­line shop­pers will feel the im­pact and are likely to think twice about open­ing their purse strings.

Hence, Chi­nese pol­i­cy­mak­ers, who are anx­ious to en­sure tax rev­enues grow fast enough to help cush­ion the coun­try’s eco­nomic slow­down, should be cau­tioned that rais­ing tax on con­sumers may prove a Pyrrhic vic­tory.

TheM­i­nistry of Finance an­nounced on March 24 that re­tail goods pur­chased on­line will no longer be clas­si­fied as “parcels” and en­joy a “par­cel tax” rate that is lower than that on other im­ported goods. In­stead, on­line pur­chases from overseas will be charged the same as any other im­ported goods.

Cur­rently, the coun­try levies par­cel tax on im­ported goods worth less than 1,000 yuan ($150), and the rate can be as low as 10 per­cent. Taxes un­der 50 yuan are gen­er­ally waived. As a re­sult, many on­line pur­chas­ing agents have sought to avoid pay­ing higher taxes by repack­ag­ing and mail­ing prod­ucts sep­a­rately so they will only be charged the par­cel tax, un­der­cut­ting tra­di­tional re­tail­ers and im­porters who have to bear a heav­ier tax bur­den on their goods.

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