The State Council has decided to solicit opinions from public on a new petroleum price and fuel tax proposal, a senior official said on November 26. The proposal calls for a taxation strategy to be based on the international oil price, but the extent of price adjustments will be limited. Once the fuel tax is in place, consumers will no longer need to pay for road maintenance costs.

To collect opinions from the public, the China Youth Daily newspaper last week conducted an online investigation which solicited 8,294 responses. The result showed that 94 percent of the respondents were concerned about the reform; while 74 percent are worried that the fuel tax will be charged before petroleum prices are reduced in line with international prices, resulting in a higher cost of living.

A well-known Chinese blogger Han Han wrote: "This reform is not about converting road maintenance costs into a fuel tax. Taking Shanghai as an example, a car owner pays 250 yuan per month, of which only 100 yuan is for road maintenance costs and the other 150 yuan goes to repayment of road construction loans. So although a car owner will no longer need to pay the 100 yuan per month for the road maintenance cost, he should still cover other road costs and the future fuel tax."

However Zhang Ping, head of the National Development and Reform Commission said: "It is fair that the more oil people consume the more they have to pay for it. By replacing the maintenance fee for roads, navigation systems and road tolls with a fuel tax, car owners will pay less than before."

Mr. Chen Yun from Beijing had a Chinese-made Tianjin Xiali for over four years. After reading the fuel tax news, he figured out, "If the tax ratio is 10 percent, I can save more than 300 yuan a year; if it's 20 percent, I have to pay 500 yuan for extra; and if it goes to 30 percent, I have to pay 1,000 yuan more than current cost."

The reform means that the more fuel one consumes, the more the consumer will pay. In the poll, almost 90 percent of private car owners indicated that they would consider reducing their fuel consumption, and 44 percent thought middle and small-sized enterprises might also adopt such measures, and only 6 percent thought it would affect car users in government departments.

The poll also revealed 59 percent thought the reform would most influence private car owners, while 54 percent chose taxi drivers; next came freight contractors, taxi passengers, auto industry staff, potential car buyers, and those workers previously involved in collecting fees for road costs.

65 percent thought their travel costs would rise as bus, subway and taxi fares might increase, 39 percent were weighing up the question whether to buy a low-emission vehicle, and 37 percent were concerned about increases in the price of daily essentials like vegetables, meat and eggs.

Ding Yi, an expert with the Chinese Academy of Social Sciences, explained that the fuel tax could increase the cost of logistics of the whole society. For instance, the price of vegetables would rise as freight charges go up. The reform would have a high impact on the individual, so it merited high social attention.

Another expert with the same academy, Yang Zhiyong, said: "This fuel tax reform will result in a re-adjustment of the benefit-sharing pattern for all consumers, local governments, road rights owners, highway and bridges owners, oil giants like the China National Petroleum Company (CNPC) and China Petroleum and Chemical Corporation (Sinopec), and even fuel smugglers and the private refiners."

The poll also collected opinions about how closely the reform meets public demand: 63 percent thought the reform should lead to public benefits, 63 percent suggested broad public opinions should be solicited, 59 percent said the benefits to different groups should be balanced, 37 percent felt that a third party should conduct an investigation into key issues like the tax ratio, and 34 percent voted to conduct a pre-implementation review of the potential consequences.

A fuel tax was first proposed in 1994. The government later said it would introduce such a tax "at an opportune time".

(China.org.cn by Zhou Jing, December 3, 2008)