Local governments expect consumption tax revenue

Updated: 2013-07-23 17:38

(chinadaily.com.cn)

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As China's reform of consumer tax may be approaching, experts advised local governments to collect a special consumption tax and car tax, according to China Business News.

The State Administration of Taxation (SAT) may adjust taxed items, tax rate, collection period, and tax refunding policy. One of these adjustments is that the consumption tax of some consumer goods will be collected from the consumer at the time of purchase instead of from the producer.

According to data from the Ministry of Finance, total revenue from consumption tax was 787.2 billion yuan in 2012, making up 7.8 percent of the national tax revenue.  

Xu Shanda, former deputy director of SAT, said that the consumption tax should become a kind of local tax to cope with local governments' decrease in revenue, and local governments will have more authority in terms of tax items and tax rate.  

Meanwhile, the collection of a consumption tax at the time of purchase can help local governments change the mode of revenue generation. It will encourage local governments to increase revenue from consumers, instead of depending on investments. Some scholars said that the reform can ease local governments' investment impulse.  

The consumption tax as local tax can delegate powers to lower levels. However, Xu said that local governments' power to tax must be limited to the scope of local administration.