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Beijing considers consumption tax reform

China may be considering a reform of consumption taxes as the Communist Party prepares for a key meeting next month, according to Goldman Sachs. Potential changes include broadening the tax base, increasing rates, collecting tax at the point of sale by wholesalers or retailers, and sharing revenue with local governments. These reforms aim to create sustainable income sources for local governments facing financial strain due to a prolonged housing slump. Additionally, simplifying the value-added tax system and introducing a nationwide property tax are under discussion. Currently, China’s consumption tax, which raised 1.6 trillion RMB ($224 billion) last year, is levied on tobacco, refined oil, automobiles, and alcohol, with all revenue going to the central government.

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