Moreover, the excise duty on imported luxury items like vehicles, watches and even pens has been increased alongside taxes on big houses. The reason for such a remodelling is that the elite can still afford luxury despite the increased prices of such commodities.
The proof of this was evident in a latest research that showed soared up sales of BMWs, Porsches and Rolex in China during last year despite substantial increase in the prices.
In a survey, conducted by Porsche, China will become biggest market for sports cars in the next three years. Currently, Porsche sales in China have eclipsed the figures in the US, which was considered the most attractive market for Porsche 9/11 GTSs and
On the other hand, China did not change the taxes on grocery and other products that are in the reach of lower and middle class. The prices of small and medium-sized cars like Honda Civic remained the same during 2011 in terms of taxes. Staple items showed
consistency in retail prices throughout the year.
In addition, the income tax rate was kept intact this year to encourage hard work in the working class and boost the motivation of the elite to create new jobs.
The government also increased the minimum wage rate in the country. 21 out of 31 provinces in China have increased the minimum wage of the working class up 22 percent in the last one year to encourage the domestic consumption, which has been one of the biggest
problems of late. Due to a substantial decrease in exports, owing to the European debt crisis and the fluctuating US economy, an increase in domestic utilization was one of the solutions suggested by economists.
These are some of the lessons that America can learn from foreign countries. Although China has not been successful in eradicating poverty, it has taken steps to avoid the worst case scenario that has devoured the West; Europe and the US in particular.