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Taxing like there was no tomorrow (3)

(Global Times)

09:22, January 11, 2013

Pressure from all sides

Financial commentator Ye Tan wrote on her blog that the situation was akin to committing suicide, adding that charging more to enterprises already in dire economic straits will send local economies into a spiral.

Profit margins for small- and medium-sized businesses manufacturing low-end products average out at only about 3 percent, according to statistics from the China National Garment Association.

Thus, many enterprises, especially small- and medium-sized ones, are struggling to make ends due to rising exchange rates and costs, said Ye.

Her concern is shared by Cai Hua, secretary-general with the Zhejiang Business Capital Investment Promotion Council. Clothing is a leading industry in Zhejiang Province.

The phenomenon of asking enterprises for tax in advance has been an apparent one throughout Zhejiang in 2012 due to the economic downturn. The situation could be even tougher for businessmen in Jiangsu, Shandong and Anhui provinces, Cai warned to the Global Times.

What Cai observed has also been seen by tax experts. Charging overhead levies has almost become a tradition in China, rearing its ugly head again at any time of economic downturn.

The last time when overhead levies were commonly seen was back in 2008. Economic growth then fell to 9.1 percent, while the rate of increase for fiscal revenue that year was 19.5 percent. Overhead levies were a major contributor to that rise, reported Phoenix Weekly.

According to the report, experts judge that the practice of overhead levies in 2012 is more severe than it was in 2008.

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