·Motorcycle consumption tax cancels consumer benefits

Recently, the Ministry of Finance and the State Administration of Taxation issued the Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Consumption Tax Policy. Since December 1 this year, the consumption tax on small-displacement motorcycles with cylinder capacity below 250 ml (excluding) has been cancelled. However, motorcycles with a cylinder capacity of 250 ml and 250 ml (excluding) continue to be subject to a consumption tax of 3% and 10%, respectively.
With this news, many industry stakeholders and consumers can't help but be "fair." As we all know, our national consumption tax is levied on luxury goods and some restrictive consumer goods such as tobacco and alcohol, firecrackers and refined oil. The main user group of motorcycles in China is farmers. According to the statistics of China Association of Automobile Manufacturers, the sales of motorcycles in China in 2013 were about 23 million, of which more than 90% belonged to less than 250 ml, which were basically sold to rural areas. Although the consumption tax is levied in the production process, it will eventually be passed on to consumers. It is unfair for farmers who belong to low-income groups in China to levy a consumption tax. According to the previous policy, each motorcycle with a displacement of 250 ml or less will be subject to a consumption tax of 3% of the price of the car. Calculated by the unit price of a 150 ml displacement motorcycle of 8,000 yuan, consumers can now enjoy a tax benefit of 240 yuan for car purchase.
The cancellation of the consumption tax on small and medium-sized motorcycles is also hard-won. According to the author's understanding, many NPC deputies and CPPCC members have repeatedly proposed to cancel the motorcycle consumption tax at the two sessions; since 2008, the China Automobile Association Motorcycle Branch has repeatedly reported to the relevant government parts that the motorcycle consumption tax is too high. Li Bin, secretary-general of the motorcycle branch, has repeatedly mentioned on various occasions that “the motorcycle industry is facing a transformation and upgrading, and the industry is facing difficulties. The current domestic consumption tax on motorcycles was formulated 20 years ago, 20 years ago, Motorcycles are also luxury goods. Nowadays, they are standard farmer's appliances. At present, the consumption tax rate of automobiles with a displacement of less than 1.0 liter is only 1%, while the motorcycle consumption tax is 3% and 10% for different displacements. This is obviously not Fair."
The cancellation of the consumption tax on small and medium-sized motorcycles is expected to play a certain role in driving the domestic market of motorcycles. Many motorcycle manufacturers have begun to prepare a series of promotional activities in conjunction with the cancellation of consumption tax and returning home for the New Year. The cancellation of the consumption tax will eventually be given to consumers by reducing the price of the product.
It is worth thinking that the way to reduce the price to consumers is indeed the most direct benefit to consumers. But what I hope to see is that companies can use the funds they have benefited to research and develop technological innovations and introduce better quality products to consumers, so that “give profit” may be more popular among consumers in the long run.
The problem of “big but not strong” in China's motorcycle industry has existed for a long time. The industry's production and sales volume ranks first in the world for 20 consecutive years, but the products are mainly concentrated in the low-end and the industry profit margin is less than 3%. The total profit of the entire industry is less than that of a Harley motorcycle company in the United States. At present, the motorcycle industry is at a critical moment of transformation and upgrading. The traditional consumer market for motorcycles is slowly changing. The income of farmers is gradually increasing. The demand for motorcycles is not limited to durable, fuel-efficient, and large cargo. Performance and appearance have higher requirements. At the same time, China's large-displacement motorcycle market is also developing rapidly. It is expected that the output of large-displacement motorcycles with a capacity of more than 400 ml in China this year will be close to 10,000, with a growth rate of 80%. Imported large-displacement motorcycles are expected to exceed 10,000 this year, with a growth rate of 120%. China's production and manufacturing experience of large-displacement motorcycles is still relatively weak. If we do not increase investment in this area, it is likely that the domestic large-displacement motorcycle market will be dominated by foreign brands. Therefore, this requires enterprises to use the profits after tax reduction for the research and development of new products and technologies, accelerate the transformation of product structure, and produce products that are more in line with consumer demand.


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