The new consumption tax policy is coming! Liquor industry will be affected and Maotai will increase its price again?

 The new consumption tax policy is coming! Liquor industry will be affected and Maotai will increase its price again?

Yan Shuxin of Xinjing and Weiwei in the data map

New Consumption Tax Policy Attracted Attention

On October 9, the State Council issued the Reform and Promotion Plan for Adjusting the Income Division between Central and Local Governments after Implementing a Greater Tax Reduction and Fee Reduction (hereinafter referred to as the Program). The relevant reform measures mainly involve three aspects, namely, maintaining the stability of the Five-Five-Year Sharing proportion of VAT, adjusting and perfecting the sharing mechanism of the VAT withholding and refunding tax, shifting the levying

Among them, the backward consumption tax levy link and steadily underline the local has attracted market attention. According to the requirements of improving the reform of local tax system and under the premise of controllable collection and management, the current consumption tax items collected in the production (import) link are gradually moved to the wholesale or retail link to collect, expand local income sources and guide the local to improve the consumption environment.

It is understood that consumption tax belongs to the central tax, which is the fourth largest tax in China besides VAT, enterprise income tax and individual tax. It occupies an important position in the tax structure. Data show that in 2018, domestic consumption tax revenue reached 106.32 billion yuan, accounting for about 6.8% of current tax revenue. At present, China has levied consumption tax on 15 kinds of commodities, including tobacco, oil, car and alcohol, which contributed nearly 99% of the domestic consumption tax.

China has levied consumption tax on 15 kinds of commodities. Source: Zhongjin Research Report

At present, the consumption tax revenue is entirely owned by the central government, and the local government will bring new revenue sources for the incremental consumption tax. CICC said.

At the same time, CICC mentioned that if other factors such as tax rate and taxation method remain unchanged, the levy link will be moved back or the total consumption tax will be raised. From the beginning of the factory, through the circulation link, and finally to the retail link, the selling price will gradually rise. If the tax rate and mode of Taxation remain unchanged, the consumption tax will be increased if the levy link is moved back. Manufacturers will benefit in the short term because of the decrease of direct tax burden, but the rise of consumption tax will restrain final consumption and commodity sales.

It is worth mentioning that the specific scope of the adjustment of consumption tax is not yet clear in the above-mentioned scheme. It only refers to the reform of high-end watches, precious jewellery and jewelry and jade items with mature conditions, and then to the pilot reform of other qualified items in combination with the consumption tax legislation. However, it is generally believed that with the implementation of the plan, the adjustment scope of consumption tax is likely to gradually expand in the future.

Institutions: Consumption Tax of Liquor Industry or Increase of Over 30 Billion

Sino-Singapore Jingwei client noted that although the new Consumer Tax Policy has not yet affected the liquor industry, liquor stocks have taken the lead. Wind data show that on October 10, the liquor stocks led by Maotai, Guizhou Province, fluctuated greatly, with nearly one-second of liquor companies closing down.

Investors are unavoidably worried because liquor is a consumption tax related to items, and the companys performance is greatly affected by changes in tax rates. There are market participants to Sino-Singapore Jingwei client analysis.

In the view of many institutions, in the short term, the possibility of the consumption tax retreat in liquor industry is relatively small, and there are some difficulties. However, with the better pilot effect in other industries, the aforementioned scheme is likely to be promoted to the liquor industry. In this regard, CICC believes that if the liquor industry is included in the scope of consumption tax adjustment, it will have a greater impact on liquor industry in the medium and long term, including the increase of industry tax burden, regional small and medium-sized liquor enterprises and the decline of the competitiveness of liquor enterprises with irregular taxation.

The plan proposes that the current consumption tax items should be gradually moved to the wholesale or retail sectors to collect, and the consumption tax base will be changed into wholesale or retail. For liquor industry, although liquor circulation channels are more complex, the rate of channel leakage will rise, overall, the tax base will continue to expand and the amount of collection will increase. Ouyang Yujian, an analyst at Sichuan Finance Securities, said.

In this regard, CICC predicts that the current total price increase rate for all sectors of liquor circulation industry is 50%-80%. If the consumption tax is increased by 12%, the consumption tax of liquor industry will increase by 32.2 billion-51.5 billion yuan, and the distributor wholesale link will bear 20%-30% of the new tax increase in liquor circulation link, according to the calculation of 536.4 billion yuan of liquor industry outlet sales in 2018 announced by China Liquor Industry Association.

Yan Shuxin of Xinjing and Weiwei in the data map

Difficulty or Increase in the Survival of Small and Medium-sized Wine Enterprises

In fact, small and medium-sized liquor enterprises are price-oriented, low-price products, more sensitive to cost changes, and they do not have advantages in brand, channel and other aspects, and lack of certain bargaining power. The increase of consumption tax will inevitably lead to a decline in product sales rate, which will have a negative impact on the operation of enterprises. In the case of the increasingly obvious trend of differentiation in the liquor industry, It may even endanger the survival of enterprises. Cai Xuefei went to Zhongxin Jingwei Client for analysis.

Cai Xuefei believes that the increase of consumption tax has a limited impact on famous liquor. Famous liquor has a greater bargaining power. It can offset this part of the cost by raising prices and subsidies, depending on its own brand and channel advantages.

CICC also mentioned that the backward trend of consumption tax collection will increase the concentration of liquor industry, which is bad for small and medium-sized liquor enterprises.

The agency pointed out that the mass price liquor consumers below 200 yuan are more sensitive to price increase, the channel price increase rate of high-end liquor enterprises is lower, the marginal impact is smaller, and the channel price increase rate of mass liquor is higher, which has a greater impact on the channel. Referring to the results of tax increase in liquor history, if the industry tax burden increases, the survival difficulty of small and medium-sized enterprises and low-end enterprises will increase significantly.

Dong Guangyang, director of Huachuang Securities Research Institute, also believes that if the adjustment of consumption tax affects the liquor industry, it will produce the result of high-grade liquor transfer, low-grade liquor subsidy. High-grade liquor, because of its strong bargaining power and brand influence, can easily transfer the tax rate cost to the consumer end. However, middle-and low-grade liquor may take the measures of subsidizing the profits in hand to distributors and terminals. To maintain market share.

In the highly differentiated competitive environment, small and medium-sized liquor enterprises have been struggling. Increased tax revenue has further reduced their profit margin, reduced risk resistance, cost digestibility and so on. Liquor industry will accelerate shuffling. Zhu Danpeng said in an interview with Sino-Singapore Jingwei Client.

It is worth mentioning that since May this year, liquor-making enterprises, including Wuliangye, Yanghe shares and Luzhou Laojiao, have taken measures such as stopping goods and raising prices to push up the prices of high-end products. Liquor-making market immediately set off a wave of price rises. The market price of Feitian Maotai once approached 3000 yuan, which has only recently come down.

Yan Shuxin of Xinjing and Weiwei in the data map

In this regard, Ouyang Yujian said that for small and medium-sized liquor enterprises, if the difference between channel price and factory price is large, under the background of unchanged tax rate and increased consumption tax, raising price will directly affect sales volume, so it is more likely that this part of enterprises will adopt subsidized distributors and terminals, and lower factory price; while high-end liquor enterprises benefit from stronger channel power and bargaining power, tax avoidance ability and direction. The downstream transfer tax burden is strong, the probability of lowering the factory price is small, and the increased consumption tax will be borne by the circulation link.

Dong Guangyang also mentioned that, due to the strong bargaining power and brand influence, it is easy for high-end liquor to transfer tax rate costs to consumers.

However, in Zhu Danpengs view, the increase of tax revenue in liquor industry is not particularly significant for the consumer side, the relevant impact is mainly reflected in the industrial side.

At the same time, Zhu Danpeng believes that the gross profit rate of liquor in China is high, with an additional consumption tax of about 12%, most enterprises can digest internally, and the possibility of transferring it to the consumer side is unlikely. However, it depends on the actual sales of various liquor brands. If the sales situation is not satisfactory, then it certainly does not dare to raise prices easily. After all, not all liquors are like Maotai. Zhu Danpeng said.

Source: Zhong Qiming_NF5619