Policymakers have talked about introducing a fuel tax for more
than a decade. Now, the country's urgent need to raise energy
efficiency makes it the right time to bring the tax into
reality.
Just one day before China announced its action plan on climate
change Monday, the State Council issued a circular urging local
governments and companies around the country to implement the
General Work Plan for Energy Conservation and Pollutant Discharge
Reduction.
Amid these considerably increased national concerns, the
National Development and Reform Commission (NDRC), the country's
pricing authority, again raised the issue of replacing the
much-criticized road tolls with a fuel tax.
The tolls do not tax drivers according to the amount of fuel
their vehicles burn so fail to encourage greater fuel economy.
The tax-for-fee reform has long been postponed partly because of
concern over the impact a uniform fuel tax may exert on low-income
groups and partly out of consideration for the employment of
hundreds of thousands of toll collectors across the country.
But the country's growing fiscal strength makes it possible to
adequately compensate low-income groups who are disproportionately
affected by the fuel tax.
At the same time, a national consensus exists on increasing
energy efficiency in the interest of sustainable development. This
makes the introduction of a fuel tax that encourages more efficient
fuel consumption an idea whose time has come.
For a developing country like China, technology is key to
cutting pollution and raising energy efficiency.
But it is equally, if not more, important to put in place strong
market incentives to guide economic development and environmental
protection.
A fuel tax raises awareness of the cost of energy. As people
become more cost-conscious about fuel consumption, hopefully they
will join the government in pressing enterprises to provide more
energy-saving products.
Soaring oil prices in recent years only added to the
difficulties of imposing a fuel tax. But failure to hit last year's
target for saving energy and reducing greenhouse gas emissions
shows the country cannot afford any more delay in the tax-for-fee
reform.
(China Daily June 6, 2007)