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Media: China to delay adjustment of alcohol tax
Updated: 2009-07-06 14:12

The State Council, or China's cabinet, will delay the adjustment of a consumption tax on alcohol products, local media reported last Friday.

The adjustment plan has been finished but the State Council decided to delay approving it, sources told China Times, a local Beijing newspaper reported.

Earlier media reports said that the 20% ad valorem tax rates of alcohol products will not be changed but tax bases and tax items will be increased.

A senior executive of a liquor maker estimated consumption tax paid by each enterprise will double if this plan is put into practice.

"Considering the current economic situation, the State Council will delay approving the plan," the Ministry of Finance told China Times last Thursday.

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A source familiar with the State Administration of Taxation (SAT) told the China Times the plan will not be approved within the upcoming next three months although. But the SAT did not confirm the report.

Many Chinese liquor firms said once the plan is approved, they will increase the prices of their products.

It is reported that one of China's best known liquor makers Maotai will raise its price 80 yuan for each bottle by 80 yuan. Another liquor firm Wuliangye will raise 59 yuan for each one.

Currently, consumption tax is less than 10% of each liquor makers’ sales turnover. For instance, the sales turnover for Wuliangye was 7.93 billion yuan (US$1.16) in 2008 while it paid 417 million yuan (US$61 million) consumption tax last year.

Elsewhere China raised the tax on tobacco products on June 19.