Analysts Say It's Still Too Early to Tax E-commerce Sector

There have been some heated debates over whether online shopping, a rapidly growing billion-yuan industry in China, should be taxed. But some analysts argue that it's still too early to impose taxes on the new industry.

He Fei has more.

Reporter:

Taobao, China's leading online business website, saw its turnover double to more than 200-billion yuan, or some 30-billion U.S. dollars, last year.

Jiang Xuping, an e-commerce expert at Tsinghua University, says although e-shopping can be categorized as a rich industry, withdrawing a tax-free policy now is still too early.

"The current debate is certainly not about whether it is right or wrong to tax e-commerce transactions. What the policymakers should do first is to measure the urgency of doing so compared to the needs of continually boosting the business."

Online entrepreneurship is believed to be an effective way of creating more jobs for millions of college graduates in China in recent years.

Jiang Xuping says most online-store owners are college students or new graduates.

Some 800-thousand people worked for Taobao last year. IDC, a business consultancy company, expects the number will reach 1 million this year.

In Shanghai, more than half of new jobs last year had been created in the e-commerce sector. The figure was one-fourth in eastern Zhejiang Province and one-fifth in Guangdong in southern China.

E-commerce expert Jiang Xuping suggests policymakers focus on making the pie bigger before taxing the young industry on which the country has come to rely as a source of jobs.

In Wenzhou, a city with a business tradition in eastern China, eight college students are running a simulative online store together after class and also receiving guidance from their teachers.

Xie Zhiyuan, President of Wenzhou University, says students can learn something real in this lab.

"Running an online store was sort of stuff in the student dorms. What we are doing is offering them a real business environment."

More than 1,000 online stores were owned by college students only in Wenzhou last year.

Around the country, 120 million people bought something online at least once in 2009. China's commerce watchdog anticipates e-commerce will make up 5 percent of national retail turnover in 2015.

He Fei, CRI news.