China Unlikely to Hike VAT on Private Firms Broadly, MS Says

The Chinese government is unlikely to raise value-added tax across the board on the private sector this year, given the ongoing disinflation and the need for macro policy consistency, according to Morgan Stanley.

• A broad tax hike will suppress consumption, investment and raise the risk of disinflation, according to economists including Robin Xing in a research note
• Such a move will also run against Beijing’s recent commitments to enhance policy consistency and rebuild private sector confidence, the note says
• Expect the government to tighten tax collection in selected areas
• Earlier, China Experts Dismiss Speculation of Gaming VAT Hike: Xinhua
• Also, ...