China to Save Firms, Consumers Extra USD300 Billion in New Tax Cuts
Zhang Yushuo
/SOURCE : yicai
China to Save Firms, Consumers Extra USD300 Billion in New Tax Cuts

(Yicai Global) April 4 -- China's cabinet has decided to cut government fees and operating service charges, saving companies and individuals as much as an additional USD300 billion a year in total.

The authorities will cut or cancel charges on real estate registrations and broaden eligibility for lower fees on patent applications on July 1, the State Council decided yesterday at a regular meeting chaired by Premier Li Keqiang. It was also agreed to further significantly reduce fees on travel documents such as passports, registrations of some trademarks, and radio frequency use.

The government also will trim tax on food and medicines to 13 percent from 15 percent, and lower the rate on textiles and electrical appliances to 20 percent from 25 percent on April 9.

It will reduce ownership registration fees for properties such as for parking spaces by over 85 percent to CNY80 (USD11.91), and halve charges on extended use of trademarks to CNY500.

It will trim average electricity prices for general industrial and commercial businesses, lower prices for rail freight transport, cut or merge port charges, and cancel fees for the certification of citizens' personal identification details.

The State Council also decided to reduce mobile internet service rates by another 15 percentage points and lower broadband service rates by another 20 points for small and medium-sized companies, amounting to some CNY180 billion this year.

Airline Shares Soar

It will halve mandatory payments to the National Major Water Conservancy Project Fund and the Civil Aviation Development Fund. CADF currently charges CNY50 per passenger on a domestic flight and CNY90 on an international flight, which includes a CNY20 contribution to the Tourism Development Fund.

Shares of Chinese airlines surged after the announcement. Flag carrier Air China gained 5.9 percent in Shanghai today, while China Eastern Airlines rose by the daily exchange-imposed limit of 10 percent. China Southern Airlines, the country's biggest by passenger volume, jumped 9.3 percent.

Value-added tax was cut on April 1. Oil, electricity, natural gas and rail freight prices all went down. Apple's iPhone and other goods also saw price cuts. Several carmakers announced a cut in their suggested retail price.

China will lower social security fees from May 1. Local governments will reduce the proportion of urban employees' basic pension rates to 16 percent from 20 percent. The phased unemployment and work injury insurance rate policy will be extended for another year until the end of April 2020.

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Keywords: tax cut , consumption