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40% People Support Tax on Luxury Item Consumption
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Forty percent of Chinese people believe consumption taxes should be imposed on more luxury items such as jewelry and VIP club memberships, according to a survey.

The survey by the Horizon Research Consultancy Group shows low-income earners would prefer to see luxury items taxed rather than common goods, while high-income people gave little consideration to the adjustment of consumption tax.

The government imposed a consumption tax on disposable wooden chopsticks, wooden floor panels, yachts, luxury watches and oil based products on April 1.

The move aimed to control and regulate energy consumption, help protect the environment by reducing demand for timber resources, and narrow the gap between rich and poor by taxing luxury items.

A taxation official told China Business News that consumption tax played so big a role in daily life that no adjustment would be made without thorough consideration.

"In no way can we impose a consumption tax on rare luxury items with no common properties and which are difficult to value," said the official. "But company and other taxes can be imposed when these items are in circulation."

Analysts with the Horizon Research Consultancy Group said high-income people were less sensitive to prices and would continue to buy luxury goods even if prices rose by 10 percent.

The company interviewed 2,552 people in the 20 cities. The survey showed the adjustment of consumption tax was generally accepted, especially on luxury items and oil based products.

(Xinhua News Agency October 13, 2006)

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