Posted by Jane Peng on April 27, 2010 under Transactional Taxes | 
United States Senator Charles Schumer has proposed that a 30% tax be placed on Chinese goods to fight the low prices on such goods that he argues derives from the Chinese governments practice of keeping its currency artificially low.
It is not controversial that China’s currency is presently undervalued. However, Mr Schumer’s response is somewhat misguided on two levels. Firstly, to impose a tariff on Chinese goods would be contrary to the principles of free trade that US government policy espouses. If the US genuinely wishes to encourage a culture of free trade, then such a move would hinder its development. Secondly, China’s under valued currency is just one reason why Chinese goods are ultra-competitive. Just as influential, if not more, is the low labor costs in China. Now the US is entitled to match the Chinese minimum wage but of course that is unlikely to happen. The reality is that in a modern global marketplace, the cheapest goods will be produced where wages are low.
Regardless, such a proposal is unlikely ever to be implemented. Why? Because the rest of the community would need to pay higher prices for goods and that would not be such a popular political move – China can breathe easy.
Posted by Li Wei on under Transactional Taxes |
For the past 6 months the Chinese government has been pondering the introduction of a property tax – an annual tax imposed on owners of property – to cool down the perceived the real estate “bubble”. Four trial cities have now been indicated – Beijing, Chongqing, Shanghai and Shenzhen. The tax will apply to residential properties. It is not clear yet whether the tax will be applied on all homes or merely properties that are not the owner’s principal residence. The policy reasons behind the tax would suggest that the tax should only be applied to investment properties.
Posted by admin on March 16, 2010 under Transactional Taxes |
For the past 12 months, the question of whether to introduce a property tax has been at the forefront of political discussion in China. China does already tax property (most usually when such property is realized) but the proposed “property tax” would be an annual tax on property.
The policy reasons behind the proposed the tax are to deter speculators from driving the price of property up and to provide a steady stream of revenue for local government. However, the prevailing perception is that given that the major property owners have significant political influence it is doubtful that the proposed tax will be ever made law. Taxes are never popular but this is one that has been the subject of more criticism than usual. It will be interesting to see what happens.
