Alibaba Group chairman Jack Ma Yun stirred up a hornet's nest on Tuesday after it was reported he had accused tax-evading e-businesses of acting “immorally” in a TV interview.
Ma made the comment on a CCTV talk show recorded on the eve of China’s biggest online shopping day on Monday, when transactions on Alibaba’s major retailing platforms - Taobao and Tmall - topped 35 billion yuan (HK$44.2 billion) as discounts fuelled customer demand.
“We support levying tax, and I’ve always firmly believed that it’s immoral if businesses don’t pay tax,” Ma said while sitting down with Economics 30 Minutes host Wang Xiaoya. “Society has made huge contributions to your enterprise by providing infrastructure - and it’s not just illegal but also immoral if you don’t pay taxes.”
Ma approached the controversial and sensitive topic of tax after talking about his expectations for the upcoming Singles’ Day and the high level of creativity required for business owners to survive and thrive in doing business online.
“94 per cent of Taobao sellers don’t pay tax since their annual sales revenue doesn’t exceed [240,000 yuan],” he said, “But those 6 per cent who do need to pay taxes are being watched by too many organisations whose only job is to check on sellers whenever they are doing well in sales.”
This leads to high costs in levying taxes, Ma added. “While someone pays 500 yuan in tax, it might cost 700 yuan to make him pay.”
Ma went on to argue that e-commerce could eventually drive down the overall costs of levying taxes on businesses in China, since conducting business online is more “efficient” and “transparent.”
It was not the first time Ma commented on the thorny issue of “taxing Taobao sellers,” many of whom run mom-and-pop shops online with a low profit margin. In a CCTV programme aired in June, Ma refuted the belief that Taobao sellers make a living by evading taxes.
“I am confident that Taobao sellers will continue to create miracles even if all of them are asked to pay taxes,” Ma said. “They didn’t succeed because they evaded taxes, they succeeded because of their creativity.”
Many Chinese net users disagreed with Ma and said they were disappointed by his attempt to take the moral high ground against Tabao sellers making a tiny profit or those who are barely getting by.
“It would be immoral if they do pay taxes, since they would be funding corruptions,” said a Shenzhen blogger.
“It’s ok to pay taxes, but who can monitor the usage of the tax once it’s collected?” asked another blogger, urging for a transparent political system where taxpayers can keep closer tabs on their taxes.
While business analysts predicted that a large number of micro-scale online shops will fold business when they are eventually forced to pay tax, shoppers worried that rising costs would eventually be transferred to the price of the products they purchase.
“It will be us who are footing the bill in the end, ” wrote a blogger.