Fuel tax reform draft plan gets strong, positive public response

Source: Xinhua  |   2008-12-14  |     NEWSPAPER EDITION

CHINA'S draft plan to reform fuel taxation has drawn comments from 48,643 people, most of them welcoming the change, the National Development and Reform Commission (NDRC) said yesterday.

According to the plan, the government will abolish six fixed fees now charged for road or waterway maintenance and management. Although fees vary between cities, the savings add up to about 1,300 yuan per year, per vehicle in Beijing.

At the same time, the plan will raise gasoline taxes from 0.2 yuan (about US$0.03) 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 opened for public comment between December 5 and 12 by the NDRC, Ministry of Finance, Ministry of Transport and State Administration of Taxation. Most of the letters, faxes and e-mails received in response to the draft, 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 meant frequent drivers could end up paying more. However, Xu Kunlin, deputy chief of the NDRC pricing department, said China's existing pump prices would decrease slightly when the country implemented the updated reform plan on January 1.

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.

In the case of gasoline 93, the most commonly used type of fuel in China, the current price stands at 6.37 yuan (about US$0.93) per liter in Beijing.

According to the US Energy Department, the average price of gasoline in America fell to US$1.699 per gallon (equivalent to about 3.8 liters) as of December 8, the lowest price since February 2004.