It has been reported that China is planning to raise consumption tax on luxury goods such as jewellery, in a move which could hit the emerging platinum jewellery market in the country.

There appears to be a consensus among jewellers in China that any increase on the levy would result in a downturn in jewellery sales across the country.

At present, there exists a five per cent consumption tax on all jewellery, but last year the Chinese government imposed a tax on luxury items including watches and yachts in a bid to increase the role of taxation in tackling poverty.

However, the jewellery sector is concerned that any increased taxation could have a significant impact on the prospects for the industry.

"If China expands the tax, we think this will affect jewellery retail sales, and as to what extent depends on the tax rate imposed," Alice Li, PR Director of Platinum Guild International Representative Office in Shanghai, told Jewellery News Asia.

China's jewellery market has grown substantially in recent times and the Economic Information Agency in Hong Kong reported in December that sales of gold, silver and jewellery grew by 22.3 per cent during January and September 2006, compared to the same period the previous year.

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