Public levy of consumption tax law: the tax rate and levy method of tobacco, alcohol and oil vehicles remain unchanged

category:Finance
 Public levy of consumption tax law: the tax rate and levy method of tobacco, alcohol and oil vehicles remain unchanged


On December 3, the website of the Ministry of Finance published the consumption tax law of the peoples Republic of China (Draft for comments), and solicited opinions from the public.

Will commodity prices rise after the law is enacted? Do consumers have to bear more taxes? It is estimated that many people will have such doubts. Dont worry, such worry is absolutely superfluous! In fact, except for the adjustment of the consumption tax collection of a few commodities, the draft has little impact on consumers.

It is worth noting that due to concerns about the increase of consumption tax, there has been a significant fluctuation in the liquor sector in the near future. In the draft for comment released this time, the liquor tax rate has not been adjusted, nor has it been included in the pilot project of late transfer tax collection reform. In this regard, the insiders pointed out that it is expected that the stock price of the liquor sector will be favorable in the short term, but the impact is limited, because the overall competition pattern of the industry will not change.

The tax rate of high-grade cosmetics for tobacco and alcohol remains unchanged

Perhaps many consumers are not clear about which consumer goods need to pay consumption tax in China, and how consumption tax is levied. In fact, unlike some countries or regions such as Europe, America and Japan, the concept of consumption tax is different. Not all consumer goods in China need to pay consumption tax.

According to the draft, the units and individuals that sell, commission processing and import taxable consumer goods within the territory of China shall pay consumption tax as the taxpayers of consumption tax. According to the table of consumption tax items and tax rates, only 15 categories of commodities are taxable consumer goods, namely: cigarettes, alcohol, high-end cosmetics, precious jewelry and jade, firecrackers and fireworks, oil products, motorcycles, cars, golf balls and ball gear, high-end watches, yachts, wooden primary chopsticks, solid wood floors, batteries, coatings.

In other words, our main consumer goods, such as food, drinks (non alcohol), clothing and household goods, are not subject to consumption tax.

In the aspect of collection, at present, the consumption tax in our country is mainly collected in the production link, which is paid by the manufacturer first, then passed through the circulation link, and finally passed on to the consumer.

The reporter of daily economic news noted that for the liquor tax rate of general concern to the market, there was no adjustment in the draft, nor was it included in the pilot reform of the backward tax collection link, and it still continued the previous policy of tax collection in the production (import) link, with the tax rate of 20% plus 0.5 yuan / 500g (or 500ml).

Similar to liquor, the tax rates and collection links of cigarettes, high-grade cosmetics, refined oil and other consumer goods have not been adjusted in this draft.

The explanation of the consumption tax law of the peoples Republic of China (Draft for comments) points out that after gradual reform and improvement, the tax system framework is basically mature, the tax system elements are basically reasonable, and the operation is basically stable. Therefore, the draft maintains the current tax system framework and tax burden level as a whole.

According to the data, from 1994 to 2018, China collected a total of 10.5 trillion yuan of domestic consumption tax, of which 1063.2 billion yuan was collected in 2018. According to a research report of Guotai Junan Securities, in Chinas consumption tax, tobacco tax accounts for the highest proportion, reaching more than 50%, followed by oil products and cars, accounting for 35% and 10% respectively.

Liquor stock group breathed a sigh of relief

It is worth noting that, in the near future, speculation about consumption tax has led to significant fluctuations in the liquor sector, and many stocks have made considerable adjustments.

On November 29, new news came out of liquor consumption tax. According to media reports at that time, the draft for comments on the consumption tax law is expected to be released by the end of the year to solicit public opinions. On the same day, A-share wine plate led the decline, big brother Guizhou Maotai closed down nearly 4%, once down more than 5% intraday; Shanxi Fenjiu, Gujing gongjiu, etc. also fell ahead. Among them, Fenjiu in Shanxi fell 4.16% and Laojiao in Luzhou fell 3.25%. By the end of December 3, Moutai, Guizhou Province, had fallen 8.73% in the past three weeks, and Wuliangye had fallen 6.35% in the past four weeks.

Many organizations read that the liquor industry will raise consumption tax as much as cigarettes and games, and may even move the taxation link to the consumer end.

For example, the research report before Ping An Securities said that the plan of the State Council (the implementation of the central and local income division reform and promotion plan after the implementation of a larger tax reduction and lower fees) has not revealed whether the liquor is included in the pilot reform. If the consumption tax is shifted to the liquor industry, the industry tax burden will increase significantly. In the case of liquor after tax transfer, high-end liquor can transfer most of the new tax burden to consumers by virtue of strong brand power and strong consumption stickiness. Among them, Maotai may keep the factory price unchanged and realize price increase in disguised form. Secondary high-end, middle end and low-end liquor or more are shared among distilleries and distributors. The lower the product grade is, the greater the proportion of liquor or new tax burden.

Hu Chao, general manager of Shenzhen Bailun fund, told reporters that in this draft, the tax rate and taxation link of liquor consumption tax have not changed, which dispels the negative expectation in the previous market. It is expected that the stock price of liquor sector will be good in the short term, but the impact is limited.

Hu Chao pointed out that for the liquor industry, the main competitiveness of high-end liquor is in the channel, and a large amount of profits in the industry are also deposited in the channel business, which has built a wide enough firewall for the liquor enterprises themselves, and the change of consumption tax has a relatively small impact on it. The middle and low-end liquor enterprises do not have such a generous firewall as high-end liquor enterprises. If the liquor consumption tax is imposed, it will have a greater impact on them. Therefore, the draft released the concerns of middle and low-end liquor enterprises, but the overall industry competition pattern will not change.

Gold and silver jewelry taxation link moved backward

In October 9th this year, the State Council promulgated the plan to promote the reform of the central and local incomes division after the implementation of a larger scale of tax reduction and fee reduction (hereinafter referred to as the promotion plan). It clearly defined the link of the post consumption tax collection and steadily delimit the area. The plan put forward the reform of the mature items such as high-end hand watches, valuable jewellery and jewellery and jade.

According to the draft, the tax items of precious jewelry and jade include two sub items: gold and silver jewelry, platinum jewelry, diamond and diamond jewelry; and other precious jewelry and jade. Compared with the Provisional Regulations of the peoples Republic of China on consumption tax implemented in 2009, the draft includes the consumption tax of gold and silver jewelry, platinum jewelry, diamond and diamond jewelry into the retail sector, while other precious jewelry, jewelry, jade and high-end watches are still subject to the consumption tax in the production (import) sector.

So, what effect will the change of consumption tax collection bring to the price of consumer goods?

According to the above research report, due to the high price elasticity of consumers to high-end consumer goods, the increase of terminal price often leads to the decrease of sales volume, and the terminal price is difficult to transform to consumers, so the distribution of interests may be more concentrated between manufacturers and wholesalers.

Li Xuhong, director of the Institute of Finance and taxation policy and application of Beijing National Accounting Institute, told the daily economic news that as an indirect tax, the bargaining power of the market is an influencing factor. Whether the industry increases the consumption tax burden will depend on the bargaining power of manufacturers, dealers and consumers.

She believes that if the bargaining power of manufacturers is strong and the profit space of dealers is small, no matter the consumption tax is levied in the production link or in the consumption link, the tax base of consumption tax will not change greatly, and the tax burden increase is small. However, if the dealers have a strong bargaining power and a large profit space, the changes in the collection of consumption tax will increase the consumption tax.

Source: editor in charge of daily economic news: Zhong Qiming