Monday, 5 December 2011

Town plans to revive tax that provoked riots

Manufacturers in the country’s hub for children’s clothes fear the levy will cripple their operations

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Guanyu 道 said...

Town plans to revive tax that provoked riots

Manufacturers in the country’s hub for children’s clothes fear the levy will cripple their operations

Choi Chi-yuk
05 December 2011

The government of Zhili town in Zhejiang province plans to revive a tax that sparked massive riots by garment workshop operators in late October, local businessmen say.

The tax could deal a further blow to the hopes of businesses trying to survive and may hinder the recovery of garment production in the town, known as China’s production base for children’s wear.

A businessman from Anhui province who owns 11 sewing machines in Zhili told the South China Morning Post yesterday the township government issued a notice on the weekend saying a tax of about 310 yuan (HK$380) per machine - similar to last year - would soon be collected.

Another small business owner, from Hubei province, said he was told on Friday a 350-yuan tax per machine would soon be levied against him.

Repeated calls for comment from the Zhili government rang unanswered yesterday.

It is the first time Zhili has tried to impose the tax following riots on the evenings of October 26 and 27, when thousands of manufacturers of children’s clothing and the migrants they employed took to the streets, hurled stones and overturned or damaged dozens of vehicles belonging to residents in protest against plans to double the tax on each factory sewing machine to more than 600 yuan.

In response, the Zhili government sent a public text message saying the tax office had decided to suspend the tax altogether.

Zhili boasts about 20 billion yuan in annual turnover from the manufacture of children’s clothing. The town, in northern Zhejiang, is home to about 300,000 people, of whom one-third are locals; the rest are migrant workers from across the nation.

The businessman from Anhui said: “The tax was 344 yuan per sewing machine last year - a rise of 164 yuan, or over 90 per cent, from 180 yuan in 2009,” he said, adding that people were upset that it was to rise to 626 yuan this year.

Although the government plans to resume taxation at the earlier level, local businessmen said it would be a heavy burden to an industry already reeling from the riots.

“Nearly half the small business bosses I know have already been forced to stop operations and return to our hometown in Anqing [in Anhui], roughly a month earlier than has been usual practice over the years,” the businessman said, declining to give his name.

He said many of his counterparts might not return if the situation worsened. Orders for their garment products had dropped drastically as a result of the violence, which had scared away customers, he said.

Fan Yuexue , another workshop owner, with about 10 employees, said many of his customers from other provinces who thought Zhili was in turmoil had refused to go to the town to place orders.

“Another negative impact of the riots is that many skilled workers have also returned home for their safety,” Fan, a Henan native, said.

Zhang Jianping , a Zhili resident, said one of the largest underground lenders had run away, owing more than 2 billion yuan to local businessmen.