Cotton import sliding tax temporarily not canceled

Under the circumstances that domestic cotton prices have been rising, many textile industry workers have called for adjustments to the sliding tariffs on cotton imports to ease the upward pressure on textile companies. However, the Ministry of Finance recently stated that it is not appropriate to cancel the cotton import sliding tax at this stage.

Analysts pointed out that under the circumstances that domestic cotton prices are high, maintaining the existing sliding tariff policy unchanged means that the raw material cost pressures for cotton textile enterprises that have continued to rise since the beginning of this year are hopelessly reduced.

The so-called sliding tax, also known as the sliding tax, is an import tariff levied on the same commodity in the import tariff in accordance with the market price standard for different price levels. This tax has a low or no tax rate on high-end commodity prices and a high tax rate on low-grade commodity prices.

In order to reduce the impact of imported cotton on the domestic market and protect the interests of cotton farmers, China began to impose a quasi-tax on the import quota of extra cotton with quotas in May 2005. The tax rate is sliding from 5% to 40%. The levy of this tax is equivalent to setting the bottom line for imported cotton prices and supporting the domestic cotton market price.

However, due to the reduction of cotton production and the suspension of exports by major exporters, domestic cotton prices have risen almost every week since the beginning of last year. Since the beginning of this year, cotton prices have continued to refresh historical high prices in the past decade. According to data from China CottonNet, the spot price of domestic cotton at the beginning of the year was around 14,000 yuan/ton, and by July it had risen to 18,000 yuan/ton.

In response to rising domestic cotton prices and increasing pressure on cotton textile companies, Zhao Linzhong, chairman of the Furun Group, who is engaged in the textile industry, and many insiders suggested adjusting or even canceling the sliding tax on cotton imports. However, the Ministry of Finance recently replied that there is currently no time to adjust the sliding tax, but will further study the flexible use of the sliding tax policy.

Lin Xiaoning, deputy general manager of Dongguan Jiashun Knitting Factory, told reporters that when the source of corporate income has not changed much, the cost of raw materials has risen a lot, which has caused the company's profits to be squeezed very hard. According to Chen Ming, chief operating officer of Jiashun Knitting Factory, the profit rate of the textile industry has dropped to about 5%.