On the choice of China's textile and garment export tax rebate policy

[Abstract] at home and abroad due to the impact of multiple negative factors, China's textile and garment exports facing unprecedented difficulties. From August 1, 2008 of two textile and garment export tax rebate rate, the tax rate from 11% to 14%, and from December 1 raised to 17% again, showing the state of textile and other labor-intensive type of industry attention. From the raised export tax rebate rate of textile clothing, combined with the development of China's textile and garment export tax rebate policy summary of China's textile and garment export tax rebate policy choices ideas were discussed.

[Paper Keywords] export tax rebate rate, the export tax rebate rate of textile and garment improve

Customs data show that the first 10 months of this year, textile and garment exports $ 153.71 billion, an increase of 8.6%, an increase compared with last year fell 12 percent. Due to the impact of multiple negative factors at home and abroad, China's textile and garment exports facing unprecedented difficulties, but industry experts pointed out: 'The next year 'weather' will be colder than this year, textile and garment enterprises, the spring of 2009 will is winter. 'in order to help textile and garment export enterprises out of the woods, August 1 this year, China's textile and garment export tax rebate rate from 11% to 13%, November 1 and then raised to 14%, plus the adjustment in December , textile and garment export tax rebate rate has reached a record high of 17%. Export tax rebate rate for textile and garment export enterprises is undoubtedly a big plus, in the short term to alleviate the current modest appreciation of the renminbi, rising costs and a slowdown in external demand and other factors superposition of the impact of operating pressure. But in the end raised the export tax rebate rate of textile and garment exports to China may have much role in promoting? In the end what kind of export tax rebate policy most conducive to the development of China's textile and garment export it? The community set off a new round of discussion on this issue.

Export tax rebates is a country exports the government indirect taxes included in the refund to exporters, so exports to non-tax price to participate in an international competition of export incentives. Since WTO rules do not prohibit the export tax rebate, so that countries actively take measures to continue to improve and improve this system.

First, before the development of China's textile and garment export tax rebate policy

With economic development and foreign trade, China's textile export tax rebate policy garment has been in constant adjustment. In March 1985 the State Council approved 'on the export levy, tax or VAT refund product regulations', provides for the export tax rebate policy from the year April 1, marking the establishment of China's current export tax rebate system. In order to promote textile and garment exports in January 2004 before the tax rebate rate of textile and garment exports of basic trends show a gradual increase. Over the years, the rapid growth of China's trade surplus and foreign exchange reserves, so that international pressure on the appreciation of the renminbi increased trade frictions. Reduce the export tax rebate rate may ease to some extent, international pressure on RMB appreciation requirements, therefore, since January 2004, China's textile and garment export tax rebate rate has been reduced several times, and implemented by the central and local export tax rebates new export rebate mechanism to share the burden. The new export tax rebate mechanism is conducive to optimizing the structure of export products, and improving the efficiency of export, foreign trade and promote sustained and healthy economic development. However, the export tax rebate of textile and garment exports to the New Deal also had a negative impact, such as the export business costs, falling profits. Super base portion export tax rebate by the central and local press share the burden, logistics management thesis may produce new local protectionism and market segmentation domestic situation and so on.

In 2008, due to the economic downturn in Europe and America, to accelerate the appreciation of the renminbi, the impact of the implementation of the labor contract law, as well as increase the cost of production rising environmental requirements factors, China's textile and garment export growth fell. In the textile and garment enterprises can look forward to, starting from August 1 after three adjustments, some textile and garment export tax rebate rate from 11% to 17%, which is China's textile and garment export enterprises ushered in a 'timely.' However, due to the negative impact of unfavorable factors far more than the current tax rate increase brings good, therefore, in the long term tax rate increase limited role in promoting the expansion of China's textile and garment exports, will not have a material impact on the textile and apparel industry.

Second, the export tax rebate rate on textile and clothing exports

(A) tax rebate rate increase textile and clothing exports to bring short-term positive

Latest textile export tax rebate rate adjustment is an important measure of the government to deal with domestic and foreign textile export environment changes. Export tax rebate rate by 1 percentage point, the equivalent of textile and garment enterprises per dollar export earnings increased by about 6 cents, in the short term to alleviate the textile and garment export enterprises, especially SMEs money tight, the pressure to reduce the deficit will have some effect.

(B) The tax rate increase is limited long-term impact on the textile export

First, the tax rate increase of less than the amplitude offset the adverse effects of other factors. Although the textile and garment export tax rebate rate increase of 6 percentage points, but since 2008 has been more than 7% appreciation of the RMB, the tax rebate rate increase rate can not cover the beginning to the present exchange rate of the renminbi against the US dollar appreciation. Textile and garment industry, the tax rate increase only partially offset by the pressure of RMB appreciation and rising costs in the industry, is difficult to have a substantial impact. From the enterprise level is concerned, if we can achieve 17% of the full rebate, the textile and garment industry may increase 20 billion, but is expected this will also be part of the positive offset bearish outside markets, said it might be only a small loss of 20 billion.

Secondly, the tax rebate adjustment is just one of the factors textile and garment exports, in addition, also include the RMB exchange rate, cost, external demand and other factors, especially the strength of external demand is to determine the textile and garment export trends lies. Currently, due to the US subprime mortgage crisis dragged down the overall slowdown in global economic growth, the trend is clearly weakening external demand, affected by tax rate increase is still difficult to stop the downward trend in the textile and garment exports.

In addition, the export tax rebate rate the buyer does not rule out possible further bargaining. As the domestic bargaining power is still relatively weak,

Foreign distributors will be largely based on tax rate adjustments, lower offer will result in domestic enterprises is difficult to get all of the tax rebate rate increase brought the benefits will be part of the benefit of foreign gratuitous away. Thus, the export tax rebate rate is impossible to reverse the current plight of textile and garment industry, it is impossible to save the textile and garment industry has become the fate of straw, export tax rebate rate limited long-term impact on the textile industry.

Thus, the export tax rebate rate alone will not solve the fundamental problem of China's textile and garment export enterprises currently encounter. So, in the end what kind of export tax rebate policy most conducive to the development of China's textile export it?

Third, the choice of textile and garment export tax rebate policy principles

I think that China's export tax rebate policy in the implementation process should be guided by the principle of neutrality of export tax rebates. Although the export tax rebate system through the implementation of various control objectives to be achieved, but this regulation is limited, the principle of neutrality of the export tax rebate system is instructive. In particular the regulatory process should be guided by the following principles:

First, the reference product in the industrial chain in the position adjusting export tax rebate rate. For the export of resource products, generally should be abolished export tax rebates. For intermediate products, especially intermediate goods and consuming more resources can be considered low tax rate applicable to exports. For manufactured goods in general should apply a higher tax rate.

Second, for more employment can be export-led export products, should apply the higher export tax rebate rate. Because China is the most populous country, the situation is very serious surplus labor force, the employment situation is very grim, and the development of labor-intensive export enterprises can effectively ease the employment pressure. So for these companies export products generally should apply a higher export tax rebate rate.

Third, in line with our standards of high-tech products should apply a higher export tax rebate rate. Although China's current overall comparative advantage is still labor-intensive industries, but some areas of high-tech products in line with our comparative advantages, while exports of high-tech products in these areas will lead to the development of China's high-tech industry, therefore, for exports of high-tech products in general should apply a higher export tax rebate rate. This is the view of the current low level of development of high-tech industry as a whole situation and make choices, and competitive export for some high-tech products can be applied to a lower tax rate.

Fourth, the production process causing serious environmental pollution products should not apply export tax rebates. China's exports of some commodities is causing serious pollution in the production process of the product for the export of these products is tantamount to the transfer of pollution to other countries, our country, and therefore, the export of such products should be strictly limited until canceled.

Four specific principles generally coordinated, however, these four principles, there are also some conflicts. For example, some of the extractive industries, and some produce a lot of pollution in the production process industry is labor-intensive industries. In this case, we should consider various factors, and make decisions based on reality.

In view of the above principles, I believe that China's textile and garment export tax rebate policy can not engage in 'one size fits all' should be taken to different export tax rebate policy for the different nature and characteristics of the product, and adjust the export tax rebate policy should also be gradually perfected a gradual process .

Fourth, the textile and garment export tax rebate policy to improve

(A) the current should increase export tax rebate rate of textile and garment

Textile and garment industry is the pillar industry of China's national economy, the textile and garment exports to ensure China's international balance of payments, exchange rate stability, solve social employment has made a significant contribution. In recent months there will be the introduction of the textile and garment export tax rebate policy certain role, but does not reverse the decline in export growth this trend fundamentally. Textile and garment industry production cost era has come, continue to reduce production costs through technological progress, optimize the product mix to adapt to market demand and the pursuit of high value-added, this is the business of long-term survival strategy. In this process, the role of government is crucial. Ask the Government to create a favorable market environment for entrepreneurs and self-discovery approach the new technologies, new products, it also requires the government to develop proactive industrial policy to encourage and support enterprises to invest in new products, new technology and encourage and support the diffusion and application of high technology.

China's textile and garment industry is facing unprecedented challenges, but is unusually clear strategic direction, that is, accelerate industrial upgrading and paper to write to promote the export product structure and changing the mode of economic development. However, from the current situation, this transition is not easy to achieve, we need to break through the many development bottlenecks, which requires a process. National export tax rebate rate increase is necessary, from a short-term point of view, in favor of textile enterprises slowed rapidly rising production costs brought about by the pressure in the long run, there was a certain innovation capability of enterprises to win time and space.

(B) timely and appropriate to reduce the proportion of the financial burden on local

Promoting the fundamental requirement to maximize economic efficiency from the development of export tax rebate policy, the export tax rebate should as far as possible all borne by the central government and local financial burden should not be too much. Sharing the financial burden from the export tax rebate to their local VAT opposite principles, the local financial burden should be shared and exported goods already paid VAT. The current export tax rebate incremental part of the local financial burden from 25% down to 7.5%, with the expansion of the size of the export tax rebate, a reasonable proportion of local financial burden should be around 5%.

(C) guidance and optimize the product structure of the textile and garment exports

It recommends the adoption of changes in product export tax rebate rate to fully reflect the ability of the state's financial burden, structural adjustment of export products and encourage exports and restrict guide and so on. Government departments to deal with the current textile and apparel products comprehensive tax research, starting from the perspective of sustainable development, to encourage exports of new products, the levy can be implemented, consistent with the tax rebate rate for some mature textile exports, the tax rate is lower than it should be appropriately tax rate on low-end, high energy consumption of textile products, it is not for export tax rebates. By adjusting the export tax rebate rate to guide changes in the structure of export products. Meanwhile, the state should make a long-term development objectives in planning and publicity, so that the textile export business for the long-term evolution of the export tax rebate policy to have a more clear understanding, to avoid the export tax rebate rate adjusted up or down to the enterprise uncertainty influence, in order to make better business decisions accordingly.

In short, I believe that the textile and garment export tax rebate rate adjustment is effective to make the government move flexibly respond to environmental change at home and abroad, however, China's textile and garment exports face many adverse constraints that rely exclusively on the role of export tax rebate rate adjustment is limited only by the development of a comprehensive export tax rebates and other related industrial policies to guide entrepreneurs within the industry through technological innovation and product upgrades to enhance the competitiveness of export products, is the only way to promote the export of textile industry sustained and stable development.

references:

[1] Zhao Jie role of export tax rebate policy analysis and selection [J]. Productivity Research, 2006,4.

Problems and countermeasures [J] [2] Ma Weisheng exists. The new export tax rebate mechanism. Tax Research, 2006,6.

[3] Li. Reflections on China's export tax rebate policy [J]. Financial Forum, 2006,10.

[4] Zhang Zhiping export tax rebate adjustment on the impact of the textile industry and countermeasures [J]. Northern economy, 2007,3.

International Trade Papers