Paint levy consumption tax: How much does the price of the product go up?

China Coatings Network
: January 27, 2015, the Ministry of Finance website posted a notice, requiring from February 1, 2015 on batteries,
coatings
consumption tax, the applicable tax rate is 4%; However, coatings with volatile organic matter (VOC) content below 420g/L (inclusive) in the construction state are exempt from consumption tax. Once the product is levied a 4% consumption tax, which means that
coating enterprises
production costs increase, in order to ensure that the original profit margins are not compressed, in addition to through technological innovation to reduce raw materials, labor and other costs, in a short period of time, only price increases this way can be selected.
According to the method of consumption tax, the component tax price, i.e., (cost and profit) ÷ (1- consumption tax rate), and then the taxable amount is calculated by multiplying the component tax price by the applicable tax rate. For example, a group of coatings for the sum of various costs of 100 yuan, enterprises to ensure 10% of the profits, in the absence of a consumption tax, its selling price should be 110 yuan; Once a consumption tax is required, the selling price shall be (100 plus 10) ÷ (100%-4%), equal to 114.58 yuan; The taxable amount is $4.58.
this, if a company does not raise prices, its profits are the price minus the cost and taxable amount of the total, the profit margin will decline. For example, a set of paints selling for 110 yuan, the total cost of 100 yuan, the taxable amount of 4.4 yuan (110 yuan times 4%), its final profit of 5.6 yuan, profit margin of 5.6%, a decrease of 4.4%. According to Sun Lianying, the industry's average profit of 5% to 10%, the profit margin of enterprises is facing a great contraction.
, paint companies to increase prices has been inevitable, "may be forcing enterprises to intensify vicious competition, the ultimate injury is dealers and consumers." But the dealer is very calm about this, bridge
painting
a dealer said, "dealers are the middle link, high forward high, low to low go, (enterprise price adjustment) estimated that there will be nothing, to maintain their own certain profit margins on the line." ”