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Expert: China should raise resources tax to encourage energy saving
2007-07-29 09:19:20 Xinhua English

BEIJING, July 29 (Xinhua) -- China should increase resources tax to encourage energy saving and curb environmental degradation, a renowned economist said here Sunday.

"The resources tax should be raised to a reasonable level to encourage efficient energy use and ease pressures on the country's resources and environment," said Justin Yifu Lin, chief of the China Center for Economic Research at Beijing University, at a forum.

In 2006 China consumed 15 percent of the world energy, but only churned out 5.5 percent of the global gross domestic product, according to Lin.

He said the current low resources tax not only helps widen the income gap, but adds heavy pressures on the nation's resources and environment.

China has set the target of reducing energy consumption by 20 percent between 2006 and 2010. The energy consumption to generate per unit of gross domestic product fell 1.33 percent last year from the previous year, only one third of the four-percent target.

China levies very low resources tax to subsidize its struggling state-owned mine groups since late 1970s, Lin stated.

He added the government should also unveil heavy punishments for environmental pollution and promote or demote local officials in accordance with their performance in helping to save energy and protect environment.

However, an official with the National Development and Reform Commission (NDRC) told a press briefing Wednesday that, though the prices of energy including electricity and oil are relatively lower, "increases in their prices would not come easily as we have to consider the possible impacts on various sectors of the society."

Zhou Fengqi, an analyst with the NDRC's energy research institute, said, "The government has delayed energy price hikes because it does not want to push up the already high inflation."

The consumer price index, the main gauge of inflation, hit the 33-month-high of 4.4 percent in June, well above the government target of three percent for 2007.

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