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Consumption Tax on Disposable and Luxury Items
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China announced Tuesday its plan to impose a consumption tax on disposable wooden chopsticks, wooden floor panels, yachts, luxury watches and more oil based products as of April 1 of this year.

The Ministry of Finance said the plan had been approved by the Chinese Government and was designed to control and regulate energy consumption, help protect the environment by reducing consumption of timber resources and narrow the gap between rich and poor by collecting a consumption tax on the luxury items.

China will collect a 5 percent consumption tax on disposable wooden chopsticks in a bid to discourage their use as they are a waste of timber resources, said the ministry.

The production of disposable chopsticks was using up China's forests at a rate of  2 million cubic meters of wood each year, the ministry said.

China sells 10 million boxes of wooden chopsticks domestically and exports about 6 million boxes each year which amounted to 15 billion pairs of chopsticks, according to the statement.

China will also impose a 5 percent tax on wooden floor panels to discourage the use of timber resources. It will also institute a 10 percent tax on yachts, golf balls and golf clubs and a 20 percent tax on luxury watches it said.

China will collect a consumption tax on naphtha, solvent and lubricant at a rate of 0.2 yuan per liter and 0.1 yuan per liter for aviation fuel oil, said the ministry.

They added that the government will collect only 30 percent of the tax on naphtha and solvent in order to lessen the impact on the industry sector. It will also not collect the tax on aviation fuel for the time being.

The ministry said it will scrap the consumption tax on skin care and shampoo products as of April 1.

(Xinhua News Agency March 22, 2006)

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