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Nankang backtracks on new tax rule

(Xinhua)
Updated: 2009-06-16 21:42

NANCHANG - A city government in east China's Jiangxi Province has called off new tax and industry policies after protests by hundreds of furniture makers and dealers, a local official said Tuesday.

Su Chuanhui, mayor of Nankang City where protesters blocked traffic and overturned police cars Monday, said the municipal government had issued a circular Monday night rolling back measures that included higher taxes and the closure of small, unlicensed furniture companies to streamline the industry.

There are about 4,800 furniture companies in Nankang, and about half are unlicensed.

The circular, released on the orders of Jiangxi's party chief Su Rong and governor Wu Xinxiong to mollify protesters, was widely reported via local radio and TV stations, websites and text message services.

Furniture companies said the tax would have further squeezed their slim profit margins.

The city drew up a plan last month to restructure the industry through mergers and crack down on unlicensed companies. The plan also included a new tax system that businesses said would have meant much higher bills.

The furniture makers and dealers traditionally paid taxes according to electricity consumption, but the new rule would have imposed taxes based on the amount of wood a company used.

The owner of Shunfeng Furniture, who declined to provide his name, said he paid about 20,000 yuan (US$2,926) a year in taxes before but would have to pay 80,000 yuan more under the new rule, which he could not afford.

The new measures, which were to have taken effect Monday, led hundreds of furniture makers and dealers to block traffic and smash and overturn at least nine police cars Monday. Also, nearly 100 dealers went to the city government building to complain about the rule.