Wed, December 17, 2008
China > Mainland > China ready to levy fuel tax

Drivers to gain from fuel reform plan

2008-12-15 03:15:37 GMT2008-12-15 11:15:37 (Beijing Time)  China Daily

Most motorists believe they will be better off under the government's proposed fuel tax system, a new survey has revealed.

Under the plan, six annual road taxes will be abolished making it cheaper for motorists who drive less than 15,000 km per year.

Almost 50,000 people commented on China's draft plan to reform fuel taxation, the National Development and Reform Commission (NDRC) said on Saturday.

Xu Kunlin, vice-head of the NDRC pricing department, said China's pump prices will decrease when the country implements the updated reform plan on Jan 1.

Yesterday, the Guangzhou Daily quoted an unnamed researcher with the Ministry of Finance as saying the cuts could be between 0.5 yuan and 0.8 yuan per liter.

"There must be some changes in the current fuel prices," Liu Shangxi, a researcher with the Ministry of Finance was quoted by the Oriental Morning News as saying. "A small cut of prices is most likely against the backdrop of declining crude oil in the global market," he said.

The plan by the NDRC, the Ministry of Finance, the Ministry of Transport and the State Administration of Taxation was open for public comment last week and attracted responses from 48,643 people.

Under the plan, taxes for road or waterway maintenance and management will be scrapped.

In Beijing, that adds up to about 1,300 yuan ($189) per year per vehicle. Fees vary from city to city.

At the same time, gasoline tax will rise from 0.2 yuan per liter to 1 yuan and diesel tax from 0.1 yuan per liter to 0.8 yuan. But despite the fuel tax rise, pump prices are set to fall next month to the delight of Chinese motorists.

Government-set domestic fuel prices have remained unchanged since June despite plunging world crude oil prices, and Chinese motorists pay much more than their American counterparts.

Gasoline 93, the most commonly used type of fuel in China, costs 6.37 yuan per liter in Beijing.

According to the US Energy Department, the average price of gasoline in the US fell to $1.7 per gallon (4.5 yuan per liter) as of Dec 8, the lowest price since February 2004.

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 said the government should reduce fuel taxes, others wanted the focus to be on saving energy and reducing emissions. Taxi and bus companies also urged the government to offer more subsidies to their businesses, which are expected to be hit hard by the reform.

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