Opinions split over “real will” to cut luxury Taxes
Written by Doug Newhouse
Friday, 13 April 2012 09:08
Opinions remain split on whether Chinese Government ministers will move to cut the country’s circa-30% luxury tax levels, as reported by the Wall Street Journal.
The newspaper claimed this week that China’s Ministry of Commerce wants to dissuade travelling Chinese from spending so much money abroad - last year visitors from Mainland China to Hong Kong grew by 23.9% to 28.1m, with this group spending more than $30bn in Hong Kong alone and much of this expenditure on luxury goods.
But ‘expert views’ appear divided on whether these ‘claimed discussions’ will lead to any luxury tax cuts or not and several told The Business today that any reductions would only benefit luxury goods companies in the Chinese domestic market if these goods become more readily accessible.
Currently there are no real luxury taxes in Hong Kong and any move towards a similar situation in Mainland China could theoretically benefit luxury goods companies more than the Chinese Government’s coffers.
Another option discussed by the newspaper and referred to by several leading suppliers and retail sources is the possibility of more tax friendly retail zone initiatives, such as those established in the City of Sanya in China. Downtown (China Duty Free Group) and airport retail operations (HN DFS at Meilan Airport) in the south China island city are said to be performing very strongly. However, this new scheme is still being monitored carefully by the government.
Some say that maintaining the status quo of spending abroad alongside this domestic option might also prove less controversial from a social standpoint – especially considering the government’s sensitivity towards the great divide that already exists in the country between the ‘haves’ and the ‘have nots’. Some sources said highlighting this divide any more conspicuously than necessary might bluntly not be such good politics.
By 2015 and on current projection levels, the Chinese Government expects 100m of its nationals to venture abroad, making China the world’s biggest outbound tourism market. Spending by Chinese overseas travellers could grow to more than $110bn a year, of which $80bn could be spent within Asia, according to the World Bank.
But just as the explosion of Mainland Chinese visitors has reinvigorated the international duty free and travel retail business, any sudden downturn in this business caused by a dramatic slowing of the Chinese economy remains a concern for some.
However, others point to an additional explosion in outbound travel and spending in the mid-Pacific and on the US West Coast if the US Government decides to implement much easier visa application processes than the cumbersome ones that exist today. A visa-waiver policy has also been discussed at senior government level, with President Obama taking a notable personal interest in this matter.
http://www.trbusiness.com/index.php?opti...&Itemid=11
I dont understand why people like Hour Glass when their key director is buying shares in their competitors
(no china tourist)
