Shandong Defends "Steamed Bread Tax" as VAT
    2011-02-22 12:10:23      Web Editor: Liu

The taxation administration of east China's Shandong Province defended that the "steamed bread tax" mentioned in recent reports is actually the Value-Added Tax (VAT), according to the 'Shandong Business Daily'.

The so-called "steamed bread tax" sparked controversy among netizens after a political advisor called for lowering the tax, which he claims currently is rated at 17 percent.

Pan Yaomin, a political advisor of Shandong Province and vice president of a flour company in Shandong Province that produces steamed bread, said the rate is too high and not only increases production costs but adds burden to people's daily consumption. He suggested the tax rate be reduced to 13 percent.

Taxation administration clarified that the tax is not exclusively imposed on steamed bread. It is actually the Value-Added Tax, a form of consumption tax.

Previous reports quote Pan as saying that people must pay a 0.2 yuan tax for each steamed bread, which usually costs about one yuan.

The administration said this is inaccurate, since consumers pay far less due to related favorable tax policies

According to the country's tax policy, 13 percent of the VAT can be deducted by steamed bread producers; therefore, consumers only pay a 4 percent tax.

This is the third time that Pan has submitted similar proposals to the province, all of which are concerned over the lowering of the tax rate on food.

Pan said the government has provided subsidies to many commodities to tame price hikes, but has ignored steamed bread, the food that many Chinese cannot live without. He said the tax cut is the most "scientific, direct and effective" way to solve the problem.


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