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Economy

Import taxes to be lowered

By Li Woke (China Daily)
Updated: 2011-02-22 13:17
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BEIJING - China is to cut import taxes on some products, including formula milk and cosmetics, as part of a series of reductions aimed at balancing international trade, the Nanfang Daily said Monday.

The newspaper quoted an unidentified official with the State Administration of Taxation (SAT) who said the tax bureau is planning the cuts because of concerns over possible tax evasion, although there was no official comment on Monday.

In January, the Ministry of Finance said the nation's tax revenue jumped 23 percent year-on-year to 7.32 trillion yuan ($1.1 trillion) in 2010, partly boosted by import taxes.

The authorities collected 1.05 trillion yuan in value-added and consumption taxes for imported goods, a rise of 31.1 percent year-on-year, the ministry said. Import tariff revenue jumped 52.8 percent year-on-year to 202.75 billion yuan.

In January, the ministry announced that it will cut import duties for computers, digital video recorders and cameras by between 10 and 20 percent. Bloomberg reported that the Ministry of Commerce said it was hoping to encourage future imports of resources and high-tech goods.

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"The tax reduction is designed to encourage imports and increase the domestic supply of related goods," said Fan Yong, director at the Department of Tax Collection and Administration at the Central University of Finance and Economics in Beijing.

Luo Dingyu, deputy director of the School of Finance at Shanghai University of Finance and Economics, said the tax reductions are partly a response to the global financial situation. "The cuts are in line with the expectations of the world's major economies. A number of countries have been hoping that an increase in exports to China will help to fuel their struggling economics," he said.

The move comes after just days after the Group of 20 meeting in Paris, at which China came under pressure to increase imports and lower its trade surplus as a means of reducing global trade imbalances.

Data from the General Administration of Customs show that China's trade surplus decreased by 6.4 percent year-on-year in 2010. That was partly due to the growing volume of imports, which increased 38.7 percent year-on-year to 1.39 trillion yuan in 2010, outpacing export volume growth, which was 31.3 percent.

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