Wider luxury tax being considered
(Shenzhen Daily/Agencies)
Updated: 2004-12-30 14:17

China might impose levies on more luxury goods and services, including golf courses, while exempting more low-income families from paying tax next year, the Beijing Daily reported.

Xie Xuren, director of the State Administration of Taxation, has said that China would "properly" adjust the range of consumption taxes.

Tax experts believe changes will be made to cover "luxury consumption activities," including spending at nightclubs, dance halls, golf courses and purchases of up-market fashion goods.

"The adjustment of consumption tax to cover these consumption activities is in line with rising living standards," said Liu Heng, vice director of the Central University of Finance and Economics school of finance and public administration.

Liu told the Beijing Daily that such conspicuous consumption did not exist when China enacted its consumption tax laws in 1994. However, it was now becoming increasingly widespread.

A consumption tax bill was first introduced in the 1970s and last modified in 1994. Taxes ranging from 3 percent to 45 percent are levied on 11 classes of goods, including cigarettes, wines, cosmetics, passenger cars, jewelry and fireworks.

On Monday, Xie told CCTV that the central government was considering increasing the tax-free allowance for personal income tax to help low-income families. Those on a monthly salary of 800 (US$96.7) yuan are exempt from tax, but many economists argue that the level is too low.

Xie said the allowance, stipulated by the income tax bill enacted in 1993, had lagged behind economic development. He said low-income farmers and the urban jobless would continue to benefit from tax incentives next year.