(Yicai Global) Nov. 29 -- China's finance ministry is expected to release a draft version of its proposed consumption tax law for public consultation before the end of this year, following the issue of a draft value-added law earlier this week, Yicai Global has learned.
"The draft consumption tax law will be released soon to complete the ministry's existing work arrangements," an anonymous source said.
VAT and consumption tax are generally collected based on provisional regulations issued by the State Council, China's cabinet. During this year's two sessions of the National People's Congress, Wu Ritu, vice chairman of the NPC Financial and Economic Affairs Committee, revealed that the finance ministry aims to complete the drafting of several laws, such as those for VAT and consumption tax, this year.
Liu Jianwen, president of the Research Institute of Finance and Taxation Law of the Chinese Law Society, told Yicai Global that the consumption tax legislation could be completed next year. But he believes that the legislative process should not be limited to simply changing the regulation's name, but requires legislators to change their ideas, that is, to fundamentally transform the tax system.
Another expert told Yicai Global that many types of tax legislation, including value-added tax, have followed the principle of maintaining the current tax framework and the overall level of tax burden, and it is expected that the consumption tax legislation will also follow the same principle. China will learn from the experience of previous reforms and consolidate the results in a legal form when drafting the consumption tax law.
Consumption tax is levied on special consumer goods with the purpose of curbing the consumption of such goods and raising fiscal revenue. Judging from the 15 tax items currently implemented, the taxed goods are mainly those that affect human health and the ecological environment, including luxury goods, non-renewable resources, and products with high pollution and high energy consumption.
The growth in consumption tax revenue remains strong against the backdrop of large-scale tax and fee reductions this year. In the first 10 months, consumption tax revenue reached CNY1.2 trillion (USD172.3 billion), an 18.7 percent year-on-year gain, that has already surpassed the total take for last year.
Editor: Tang Shihua