China will not introduce a fuel tax and adjust oil prices at the same time, said Cong Ming, director of the Tax Policy and Legislation Department of the State Administration of Taxation (SAT), at the Oil Circulation Industry Development Summit Forum 2007, held in Beijing on September 1, according to today’s Shanghai Securities News.  

“Collecting fuel tax and adjusting oil prices are two different things, and they will not be introduced in tandem with one another,” said Cong.

 A recent report said the National Development and Reform Commission, China’s top economic planner, is preparing for another round of domestic oil price adjustments pressed by oil giants such as China National Petroleum Corporation and China Petroleum & Chemical Corporation, and the anticipated fuel tax will be launched together with those adjustments. 

“The fuel tax reform in China is in urgent, but the tax will be launched at a proper time,” said Cong. 

Meanwhile, Cong said the impact on oil circulation enterprises will be limited.

It will not increase enterprises’ burden although oil prices may rise after highway maintenance fees are abolished at the time of the fuel tax launch, because highway maintenance fees are shared by consumers, explained Cong. 

Cong said the resource tax reform should be faster in comparison, adding the collection method will be based on prices instead of quality, in a bid to adjust product profit and industry structures.

The resources tax reform will also have few impacts on oil distribution enterprises, said Cong, explaining that enterprise profit will not be lowered because the increased tax burden will be offset by oil prices.

(Chinadaily.com.cn September 3, 2007)