China raises tax on gasoline, diesel
Print Edition
CHINA’S consumption tax on oil products will rise today for the first time in five years, as the government seeks to cut emissions and boost the green economy.
The tax on gasoline will rise from 1 yuan (16 US cents) to 1.12 yuan per liter, while the rate on diesel will increase from 0.80 yuan to 0.94 yuan per liter, the Ministry of Finance and the State Administration of Taxation said in a joint statement.
As the adjustment will offset a dip in crude oil prices on the international market, analysts estimated that fuel costs for drivers will be flat after the move.
The National Development and Reform Commission, China’s top economic planning agency, said yesterday that after fine-tuning the tax it will maintain retail fuel prices at the current level, reversing market expectations of a ninth price cut since July.
The consumption tax rise will apply to other petroleum products including naphtha, lubricating oil and jet fuel, but small-displacement motorcycle, tire and ethyl alcohol are exempted in a bid to reduce the financial burden on low and middle-income groups.
China in 1994 introduced a consumption tax on goods with a high energy cost and high pollution. It was designed to guide production and consumption toward being more environmentally friendly and promote a sustainable economic growth model.
More than 10 countries, including Russia, Australia and New Zealand, have raised their oil product consumption tax rates since 2012 to promote green development.
The government said it will use the extra income from the tax increase to finance the battle against climate change and pay for pollution-control measures.
A research institute under Sinopec Group projected the extra revenue will be about 40 billion yuan a year based on gasoline and diesel consumption rates from last year.
“The tax adjustment on petroleum products is a global trend and underlines the urgent need to promote a green economy worldwide,” said Liu Shangxi, director of the Research Institute for Fiscal Science at the finance ministry.
The move will save oil resources and help to reduce emissions, which are a major cause of air pollution, he said.
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