Industry experts say that the main purpose of the much-discussed possible consumption tax overhaul is to adapt to the upgrading of the consumption structure in China. Certain cosmetics and tires that used to be regarded as luxury goods have become everyday items for the public, leading many experts to recommend tax cuts on cheaper cosmetics, while raising taxes on luxury products and activities, including tobacco and golf…Full Article: China Daily Sept 2016

Key Point

  • According to an unnamed representative of the Department of Finance from a western Chinese province, some consumption tax revenues from solid hard flooring and liquor may be given to local governments as opposed to solely the national government (as is typically the case).  The Director of the Department of Taxation Studies at the National Academy of Economic Strategy of the Chinese Academy of Social Sciences noted that over 90% of China’s consumption tax revenues are collected from tobacco, liquor, oil and automobiles.

ChinaAg Comments

  • From 2014 to 2015, the tobacco industry’s contribution to China’s state revenue increased 20.2% to CNY 1.1 trillion (~US$170 billion). In 2014, 6.49% of China’s state revenue originated from the tobacco industry. Approximately 50% of Chinese men smoke, while only 2.7% of Chinese women smoke. In total, China has roughly 316 million smokers.
  • China’s consumption tax covers 14 goods including tobacco, alcoholic drinks and alcohol, cosmetics, jewelry and precious stones.

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