China plans to expand luxury tax

BEIJING, Nov 15, 2006 (AFP) – China is planning to expand a consumption tax on luxury items and adjust upward other taxes in an effort to even out income distribution and reduce poverty, state press reported Wednesday. Ongoing tax reforms should include adjustments to the personal income tax, property tax, and consumption tax in an effort to “strengthen the role of taxation in reducing poverty,” the China Business News cited Wang Li, vice head of the State Administration of Taxation, as saying.

Wang was speaking at a forum on fiscal reform, it said.

No timetable or other details were given, but the report said that items such as jewelry and VIP club memberships could be added to the existing list of taxable luxury items.

Following nearly 25 years of robust economic reforms, China’s living standards have improved markedly, yet a widening gap between rich and poor has opened to the point of becoming a leading social concern.

On April 1, the government imposed a consumption tax on wooden floor panels, yachts, luxury watches, golf clubs, oil-based products and other items.

According to Tang Gongliang, a tax expert at the Central University of Finance and Economics, China needed to constantly adjust the