Mish, Gas tax in China will not be likely in the near future. The main purpose for Chinese gov. wants to charge tax is to encourage people to save and consume less of gas.
This issue has been on the agenda for 10 years now. Plenty of issues still haven’t been resolved yet.
Gas tax, according to the plan, will replace the road maintenance fee and other 14 dif. types of fees. Road maintenance fee counts for 80% of all fees. The central gov. want 100% of the gas tax for imported oil, and 40% of domestic-produced oil. Currently, 50% of gas depends on imports. So that means the local gov. can only get 30% of the new gas tax and their funding for the road maintenance will be dramatically reduced. Besides, some highways are funded/built by local gov. it will be impossible to ask those highways to be free like all the state-funded highways.
Another issue is the conflict bet. transportation dept. and the revenue dept. Right now, there are 270,000 people all over the country employed in fee-charging sector. One major issue for not starting the national gas tax in 2000 was not able to relocate those employees.
The current gas tax plan (of 50% or so) has been designed according to the oil price of $15 a barrel, but now oil has become $50 a barrel. So for an average car owner who run 20,000 kilometer a year, the cost of gas tax would be an additional of 4000 Yuan, and road maintenance fee he saved would only be 3000 Yuan or so. And this is against the principle set by the gov. that the implementation of gas tax would not increase the cost of driving for consumers. So how much for the gas tax now become a difficult issue.
How to charge the gas tax is also a problem. It would encourage smuggling if taking out the tax from refinery. If charged from gas stations, there are >100,000 gas stations all over the country, the logistic will be a problem. The administration of the tax would be very expensive and possible widespread corruption and tax fraud.
Who should pay the gas tax is also an issue. 20% of gas and 80% of diesel are not used for transportation. So the potential liability would be too high for these non-transportaion industries and consumers, including a lot of farmers. That means for these sectors, the gov. needs to give some subsidies or tax refund. Another way is to use 2 tax rates, which would encourage illegal transaction.
The gas tax would also increase the cost for those long distance transportation.
Gas tax will be implemented sooner or later. And there is plenty of conflict of interest bet. dif. sectors, and there are a lot of decision-making here. It will take a strong decision-maker to finally put it into effect. |
