China has announced to reduce import tax by overt 50% on some of the consumer merchandise, which includes apparel, in pursuit to invoke increase in spending among domestic consumers, as reported by media.
As per reports from the finance ministry in China, the lowered tax on imports on goods such as fur garments, sports shoes, western style suits, and boots will be in effect from June 1.
The move is announced with the intention to surge imports, encourage domestic spending, and also satisfy demand from consumers for import of certain goods.
Detailing out the import duty lowered tax scenario, the minister said, import duty on fur clothing and suit will be lowered from 14-23% to 7-10%, and for sports shoes and short boots it will drop from 22-24% to 12%.
The tax cuts come as a move of the Chinese government to find ways to increase spending within the country. The retail sales growth in the country has been dropping, and the economy exhibited 7% growth year on year in the first quarter, the worst ever performance in six years.
The slowdown in revenue has shaken policy makers, who at one time worried that import duty reduction would impact tax revenues, as said by analysts.
As commented by a market consultancy, spending on luxury goods last year by Chinese consumers were US$61.3 billion. Almost 55% of the spending was made in foreign markets, and another 15% of the spending was done at daigou. A less than one third of the luxury goods purchases were made in mainland China either through online portals or brick and mortar shops.