China's Luxury Tax Cut?

China is considering cutting its 10% to 30% luxury tax on imported high-end products such as handbags, watches, and cosmetics down to the 2% to 15% range. If implemented, the cuts will be rolled out gradually, starting with cosmetics, tobacco, and alcohol. Since China is the fastest growing luxury market on the planet, this could be a boon to manufacturers and retailers of luxury goods -- and from the Chinese perspective, keep more sales in China rather than out at shopping destinations Hong Kong, Macau, US, and Europe. However, savvy Chinese shoppers may not be swayed because even after all customs, sales, VAT, and other taxes are considered, luxury goods often cost a third less outside of China (especially at duty-free shops), than inside.