Fuel Tax Raise Coming On Jan. 1

Higher gas taxes are a step closer. The National Development and Reform Commission is calling for pubic comments on a plan to raise the consumption tax on gasoline to 1 yuan a liter from the current 0.2 yuan. The announcement posted on the commission’s web site on Friday is here, in Chinese.

The new tax, intended to help make China a more efficient consumer of energy, has been heavily trailed and is now scheduled to be introduced on January 1 – regardless, this Bystander assumes, of any public comments to the contrary.

The new tax is unlikely to make much difference to pump prices initially. The government has been pre-taxing, so to speak. The price of gasoline is set by the state, and despite the price of crude falling 70% since July to a near four-year low, pump prices have not been allowed to fall to reflect that.

At some point that will have to change, otherwise the market impact of higher fuel prices on consumption habits won’t take effect.

China’s Gas Tax Expected ‘Within 20 Days’

Fuel taxes are to be imposed within 20 days, according to China Daily, quoting reliable sources in the latest in a series of leaks prepping their introduction. This will reverse the subsidies now given to refined petroleum products. The aim is to make China a more efficient consumer of energy. The 60% fall in global crude oil prices from their record high in the summer provides an opportunity to tax domestic fuels such as gasoline and diesel with less initial impact on pump prices. The initial rate is expected to be 25% or a little over a yuan a liter.