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China's long-expected fuel tax will not be implemented until the first quarter of 2002 at the earliest, said Ni Hongri, a research fellow with the Development Research Centre under the State Council.
Ni's remarks follow a recent notice jointly issued by the Ministry of Finance and the Ministry of Communications requiring local communications departments to collect road maintenance fees for 2002.
The proposed tax was designed to replace road maintenance fees in the central government's "fee-for-tax" reform, Ni said.
An official with the Ministry of Finance confirmed that it is also uncertain whether the new tax would be implemented in the second quarter of next year.
This conflicts with information given by Director Jin Renqing of the State Administration of Taxation earlier this year indicating the country would institute the repeatedly delayed tax at an appropriate time this year.
Conflicting interests among various departments are a major reason for the delay, said another research fellow with the centre identified as Chen.
"Communications departments will no longer hold the road maintenance fees, as they do now, after the implementation of the new tax," he said.
The new tax will be an added financial burden for producers of finished oil because it will be levied on producers but not on retailers. Moreover, these companies have already suffered from an oversupply of oil.
Another key reason for the delay is continuing high price of oil since March 1999, Ni said.
International oil prices have risen from about US$10 per barrel in March 1999 to about US$21 per barrel at present, as a result of a reduction in the supply of oil.
The high oil prices and relatively high tax rate would saddle users with an excessively heavy financial burden, she said.
The fuel tax, combined with the value-added tax and the consumption tax, would account for more than 50 per cent of fuel prices, insiders claimed.
"This will increase the burden for those who frequently use vehicles, including taxi drivers," said Ni, who noted that the Chinese Government has made the elimination of unscheduled levies and the transformation of necessary fees and charges into taxes one of the priorities of its fiscal reforms.
The proliferation of such fees, which are usually managed as "off-budget" income, has sparked a vast number of complaints and complicated the fiscal operations of the State.
In October, 1999, the Standing Committee of the National People's Congress passed amendments to the country's Highway Law, paving the way for the implementation of the fuel tax.
(China Daily November 16, 2001)
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