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It is only a matter of time before China moves to reduce import duty on luxury goods, according to ChinaDaily, quoting Yao Jian, a Ministry of Commerce spokesman.

The report said the commerce and finance ministries are likely to submit a proposal on measures to promote imports to the State Council, the Cabinet, and this will include details on cutting duty on luxury items.

China has committed itself to doubling imports by 2015 to balance trade.

Amid a decline in import growth over the past few months there were suggestions that the government was considering cutting duty on some luxury goods, such as cosmetics, cigarettes and alcohol.

Yao was quoted saying the relevant authorities have, in principle, agreed to lower import duty on some luxury goods to help boost imports, although there are differences on the specifics.

With rising disposable income and a growing brand awareness, China is expected to surpass Japan by 2012 as the world’s largest luxury consumer market, with an estimated value of USD14.6 billion, according to the World Luxury Association.

But industry figures also reveal that Chinese consumers spend four times more on luxury goods abroad than at home, thanks to high import duty and taxes.

Liu Huan, an adviser to the State Council and deputy director of the School of Taxation at the Central University of Finance and Economics, was quoted saying the move should stimulate domestic consumption as consumers will spend more in the domestic market.

Reducing duty will also mean that China honours commitments to the World Trade Organization (WTO), he added.

Since China’s WTO entry in 2001, import tariffs have dropped to 9.8%, on average, from 15.3%. But tariffs on luxury goods are 30%, on average, with import duty hitting 65% on wine.

China vowed late last year to increase imports to balance trade and ease pressure on yuan appreciation resulting from its large surplus.

The Ministry of Commerce said that imports of luxury goods, and other items such as high-tech products, will be expanded.

Manufacturers of luxury goods welcomed the planned duty reduction.

Import duty, value-added tax and consumption tax on imported goods, including luxury items, reached more than 1.25 trillion yuan (USD$193 billion) last year, accounting for 30% of China’s fiscal income.

— Source: ChinaDaily


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