Zhejiang Industry Calls Again for Cancellation of Gold Consumption Taxes

Recently, in response to the “Several Opinions on Promoting the Development of the Gold Market” issued jointly by the People's Bank of China and the National Development and Reform Commission, and some other ministries and commissions such as the National Development and Reform Commission, some gold store operators in Hangzhou, Ningbo, Shaoxing and other places made remarks and raised gold jewelry again. Consumption tax should be cancelled as soon as possible.

The Opinions point out that Chinese residents have a cultural tradition of spending and investing in gold. With the healthy and rapid development of the national economy and the improvement of people’s living standards, residents’ demand for gold jewellery, gold coins and investment gold has grown steadily. The rich variety of gold market is conducive to broadening investment channels, meeting the diversified investment needs of investors, helping investors to rationalize assets, increase investment income, and ensure asset safety. According to industry figures in Zhejiang, in China, the consumption of gold jewelry accounts for a large part of the overall demand for the gold market. A better and more reasonable expansion of the gold jewelry market will play a very important role in promoting the development of the entire gold market.

Today, Zhejiang people, like the people of the country, enjoy better days, more and more money, and more and more spending power. Buying gold jewelry and gold bars is extremely common. However, unfortunately, due to current policy restrictions, it is difficult to cash gold jewelry into cash, commonly known as "buying easy to sell difficult." "Opinion" regards gold jewelry as an investment type, and the current situation of "difficult to buy and sell" makes this investment channel difficult to open. An industry insider said: "At present, it can only be a kind of ornament that looks beautiful, and it cannot be an investment product at the same time."

Why is that? A manager of Zhejiang Jinpu said: “Because general gold shops don’t recycle gold jewelry, not only in Zhejiang, but also in most parts of the country. There are individual informal small gold stores that can be recycled, but the recycling price is very low. People who have become gold jewelry will suffer losses. Of course, emergency can also be taken as a pawn, but pawn is a short-term **, not a platform for investment transactions."

Why does Gold Shop not have gold jewelry repurchase business projects? According to analysis, the direct reason is that the cost of repurchase is too high. China’s current policy stipulates that 17% of value-added tax shall be levied on transactions involving real gold, and 5% of consumption tax shall be levied on retail of gold jewelry. Repurchasing as a business shall be taxed again. Therefore, when merchants buy back, they must count this tax, and the recovery price is bound to be depressed. According to the existing tax policy, if the residents realise gold jewelry in the market, they will suffer more than 15% loss from the market price. The silver shop in Zhejiang and other places has not dared to do business that is difficult for customers to accept. A gold shop manager in Ningbo said: “The gold jewelry is difficult to realise. It is difficult for the public to make money because the gold excise tax imposes an obstacle on the repurchase business.”

Zhejiang businessmen believe that the collection of consumption tax on gold jewelry is irrational. The majority of investors investing in gold mainly focus on gold bars, gold bars, etc., which do not receive consumption tax, and will not buy gold jewelry. They believe that in China, gold jewelry has long been an ordinary consumer goods, no longer a luxury. In some developed countries or in some countries that are not very developed around China, there is basically no consumption tax on retail sales of gold jewelry. Everyone earnestly hopes that with the introduction of the "Opinions" of the six ministries and commissions, the call for the abolition of the consumption tax on gold ornaments will be brought to the attention of the relevant parties and resolved as soon as possible.

Previously, the Zhejiang industry has been deeply puzzled by the state's excise tax on gold jewelry. It is considered unreasonable and unsuitable, and it is not conducive to private deposits and active gold investment. Now that the old words are revisited, the call for cancellation is even stronger.