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Jan. 1 'good' for fuel tax, oil price reforms: official
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Zhang Xiaoqiang, vice minister of the National Development and Reform Commission (NDRC), said on Thursday that Jan. 1 would be "a good time" to introduce a fuel tax and reforms in state-controlled oil pricing.

Zhang made the comments while participating in the fifth China-U.S. Strategic Economic Dialogue in Beijing.

The State Council, or the Cabinet, discussed the reform plans for oil pricing and fuel taxes and fees last week, and it decided to release the draft reform plan for public comment.

Zhang said the government had reiterated its intention to extend its reforms relating to resources, including energy, to reflect "scarcity of resources, market supply and demand and environmental costs."

The prices of domestic oil products "still show a big gap in respect to this principle, so the government has decided to speed up the reforms."

The introduction of a fuel tax was first proposed in 1994 but has been delayed amid concerns that it would impose too great a burden on those who consume more oil. The government now collects road maintenance fees from automobile users regardless of how much gasoline or diesel oil they use.

According to the NDRC, the top economic planner, the government has been studying a fuel tax to replace road tolls.

China's move to impose a fuel tax comes as world crude oil prices have plunged almost 70 percent from a peak of 147 U.S. dollars per barrel in mid-July. Analysts have said the decline presents a window of opportunity for China to carry out fuel tax reform.

During the first half, oil refiners experienced losses as world crude prices soared, because the government kept domestic fuel prices below cost to avoid inflation. The government raised fuel prices in November 2007 and again in June 2008, but these rises lagged behind those of global prices.

Experts and officials, including top statistician Yao Jingyuan, have said the price falls gave China more leverage to loosen price controls on resources.

(Xinhua News Agency December 4, 2008)

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