Automobile buyers will pay less tax when purchasing the majority of
vehicles in China from November 1.
The State Administration of Taxation (SAT) announced the decrease
in the basic price for taxation of more than 30,000 types of
domestically made and imported automobiles in the wake of the
automobiles' price drop in the domestic market.
It
is the first time the administration has adjusted the basic price
for taxation after the country began to implement the automobile
purchasing tax to replace the automobile purchasing fee at the
beginning of the year, an official with SAT said.
Following the adjustment, China's tax departments are expected to
pay close attention to market changes, in preparation for the
country's accession to the World Trade Organization (WTO).
The administration will adjust the basic price for taxation at
proper times, in accordance with the market changes, the SAT
official said.
"The adjustment indicates that tax departments try to create a fair
market environment, while managing to keep a normal tax income,"
said Ni Hongri, a researcher with the Development Research Center
under the State Council.
However, the adjustment alone is not expected to have many positive
effects on the country's automobile consumption, and, therefore,
China should introduce a complete automobile policy to encourage
consumption, according to Liu Shijin, another of the center's
researchers.
"It is imperative for the government to develop a specific
consumption policy and put it into operation to encourage more
private buyers."
It
is predicted that private consumers will account for 70 percent of
total auto sales within the next 10 years.
Liu believes an adverse consumption environment is one of the
biggest obstacles curbing the development of the auto industry.
Jia Xinguang, an analyst at the China National Automobile Industry
Consulting and Development Corp, said the most serious problem was
local authorities placing limits on the use of private and mini
vehicles, alongside arbitrary fees imposed on consumers.
The central government already charges a 3 to 8 percent auto
consumption tax and a 10 percent purchase tax.
"I
hope a favorable consumption policy will be released this year,"
said Jia, adding that the current limits, taxes and fees have
seriously depressed the market.
Presently, taxes and fees charged by local governments average 15
to 40 percent of the price of a car.
According to the China Institute of Automotive Economic and
Technical Information, the taxes and fees imposed on consumers by
central and local governments in 1999 exceeded 160 billion yuan
(US$19 billion), compared with profits of less than 5.8 billion
yuan (US$699 million) for all domestic automakers.
Things have not significantly improved since then, although the
central government has abolished 238 administrative fees for
customers since July last year.
Qie Xiaogang, a manager of the Beijing Asian Games Village
Automobile Exchange, said the most important thing was for a
"unified" national consumption policy to be strictly implemented to
improve the depressed consumption environment.
The policy could be fine-tuned afterwards in line with the
development of the market and the auto industry, Qie added.
(China Daily October
25, 2001)