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China > Mainland > China ready to levy fuel tax

Most Chinese favor fuel tax reform plan

2008-12-13 10:29:38 GMT2008-12-13 18:29:38 (Beijing Time)  Xinhua English

BEIJING, Dec. 13 (Xinhua) -- In just one week, 48,643 people commented on China's draft plan to reform fuel taxation, most of whom welcomed the change, the National Development and Reform Commission (NDRC) said here on Saturday.

According to the plan, the government will abolish six fixed-fees now charged for road or waterway maintenance and management. In Beijing, that adds up to about 1,300 yuan per year,per vehicle. Fees vary by city.

At the same time, the plan will raise gasoline taxes from 0.2 yuan (about 3 U.S. cents) per liter to 1 yuan and diesel taxes from 0.1 yuan per liter to 0.8 yuan. Thus, the plan is intended to cap and perhaps decrease, fuel use.

The reform plan was made open for public comments between Dec. 5-12 by the NDRC, Ministry of Finance, Ministry of Transport and State Administration of Taxation.

Most of the letters, faxes and e-mails received, were in favor of the changes, NDRC officials said.

The abolition of yearly fees could make it cheaper for drivers who rarely use their cars, but higher gas taxes mean frequent drivers could end up paying more. However, Xu Kunlin, vice head of the NDRC pricing department, said last Tuesday, China's existing pump prices will decrease slightly when the country implements the updated reform plan on Jan. 1.

Currently, Chinese drivers are paying much more than drivers in other countries for gas. Government-set domestic fuel prices have been unchanged since June despite plunging world crude oil prices.

Take gasoline 93, the most commonly used type of fuel in China. The current price stands at 6.37 yuan (about 0.93 U.S. dollars) per liter in Beijing.

According to the U.S. Energy Department, the average price of gasoline in America fell to 1.699 dollars per gallon (equivalent to about 3.8 liters) as of Dec. 8, the lowest price since February2004.

Of the 48,643 comments on the plan, 58.5 percent came from private car owners, 19.8 percent from people without any vehicle, 5.9 percent from companies and organizations, 5.4 percent from motorcycle owners and 3.5 percent from owners of freight vehicles.

While some people said the government should reduce fuel taxes, others wanted them raised to save energy and reduce emissions.

Other people urged the government to offer more subsidies to businesses expected to be hit hard by the reform, such as taxi and bus companies. Others wanted more specifics on how to deal with fee-collecting staff who will be laid off as a result of the reform.

NDRC officials said the four departments will seriously consider these comments and improve the draft plan before submitting it to the State Council, China's Cabinet for final approval.

China has been pushing for fuel tax reform for many years. The idea was raised back in 1994. Both government officials and academic economists said the current global oil price plunge presents a window of opportunity for this reform.

The world crude oil price has plunged almost 70 percent from a peak of 147 U.S. dollars per barrel in mid-July.

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