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Will The New Tax Policy Affect Your Life?
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2006-04-01 10:07:46
CRIENGLISH.com
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As of tomorrow, April 1st, China will adjust its list of taxable items and rates as well as other related consumption tax policies. It is the biggest change to be made to the consumption tax system since 1994. So what effect could this adjustment have on people's consumption behavior?
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 (Audio available for download)
The new tax change is mainly targeted at high-end products. Automobiles with an engine capacity of at least 2 liters will be taxed at a rate between 9 and 20%. Take the Honda CR-V 05 2.4L manual as an example, the cost of it will see an approximate increase of 9000 yuan.
This possible change in price may make potential car purchasers reconsider their consumption plan.
"I could afford a big car originally. But if the price shoots up after the adjustment, I'll consider buying a smaller one."
Sales representative Li Wei from Beijing's Ya Yuncun automobile market has already observed the impact of the new tax policy since it was announced ten days ago.
"Most of the cars we have sold recently are big ones. For example, V6s, V8s, SUVs. Car buyers are trying to apply for the plate registration before the 1st of April. The registration centre at the car market was totally packed yesterday. Most applications are for four wheel drive cars."
Apart from automobiles, the new tax policy will also apply to some other items like high-quality watches, and golf equipment. For example, a 20 percent consumption tax will be imposed on luxury watches that sell for over 10,000 yuan, and a 10 percent tax will apply to golf products.
People have generally reacted calmly to the tax hike. Many people don't even think it has much to do with their life.
"It will have limited influence on people's consumption mentality. It mainly covers a limited number of luxury goods. Maybe it will affect wealthy people. But for ordinary people like us, there will be barely any influence."
There are also others who won't consider it as a real burden to their wallets.
"It depends on whether I need the item or not. If I really need it, I would definitely buy it. If I am a huge golf fan, I will buy the products no matter how much they cost."
This new consumption tax policy was created to control the public's consumption behaviours. But to what degree it will have an effect will be determined by individual consumers' financial situation.
China Drive is one of CRI's radio programs aired from Monday to Friday. Chinastic picks the most interesting life reports from China Drive. Stay tuned.
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Director: Liu Chi 
