Finance minister calls for tax reform

Chinese Finance Minister Xie Xuren said Thursday that China needs to improve its tax system to stimulate consumer spending, The Wall Street Journal reported. Beijing is studying measures to expand a value-added tax trial and improve China’s consumption tax to “guide reasonable consumption” more effectively, Xie said in a statement on the ministry’s website. An experimental value-added tax reform, already in place in Shanghai, may soon be expanded to Beijing. Under the program, certain parts of the service sector will shift from paying business tax to a value-added tax, thereby lowering their overall tax burden. Xie also said the government is studying a mechanism to curb speculative investment and demand in the property market. China currently sets a special consumption tax on certain categories of goods including automobiles, liquor, cigarettes, luxury items and fuel.