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Fuel-tax hike will not increase pump prices
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China has assured motorists that imminent fuel-tax reform will not mean rising prices at the pump.

To dispel misunderstanding that a higher consumption tax will mean higher pump prices, the government on Saturday said that pump prices won't be raised and the reform won't increase costs for fuel consumers.

The government has released a draft reform plan to solicit public opinions, which can be submitted until Friday.

The plan, scheduled to take effect on January 1, will abolish six fixed fees currently charged for road or waterway maintenance and management.

Instead, drivers will pay a higher proportion of tax in the price of petrol. Petrol taxes will be raised from 0.2 yuan (about 3 US cents) per liter to 1 yuan and diesel taxes from 0.1 yuan per liter to 0.8 yuan.

However, the tax is already reflected in pump prices and won't mean an additional increase in retail prices, said a joint statement by the National Development and Reform Commission, the Ministry of Finance, the Ministry of Transport and the State Administration of Taxation.

The fuel-consumption tax hike is designed to encourage motorists to drive less and buy fuel-efficient cars.

There will be a ceiling on pump prices as part of the plan. The government said it will continue to regulate domestic pump prices to prevent the negative impacts of huge fluctuations in international oil prices on the domestic market.

The reform will help to promote development of the oil sector and energy saving, and to ensure domestic fuel supply and a stable economic growth, said the statement.

Under the reform proposal, China will gradually eliminate charges on local government-funded secondary toll roads and six types of annually charged road and waterway maintenance fees, to offset increases in fuel-consumption taxes.

The length of secondary toll roads accounts for 60 percent of China's total toll roads, according to the statement.

In China, roads are classified as expressways, arterial roads and secondary roads, in addition to other lower tiers.

"These secondary roads no longer function as trunk lines with the development of highway networks," the NDRC said, adding that so many toll gates have come into conflict with local economic development and people's livelihood, said the commission.

The total length of China's toll roads will be more than halved, as will the number of toll gates.

China's roads totaled 3.58 million kilometers by the end of 2007, among which 54,000 kilometers are expressways. About 42 percent of its secondary roads are toll roads.

(Xinhua/Shanghai Daily Decemgber 8, 2008)

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