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Page added on November 29, 2014

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China Raises Tax on Oil Products

Public Policy

China said Friday that it will raise the consumption tax on a range of oil products in a move to promote conservation and boost the attractiveness of alternative energy.

The move, announced by the finance ministry, was also aimed at reducing pollution–a problem that authorities have been struggling with as air quality levels plummet across much of the northern part of the country and popular discontent increases.

The higher tax, which will hit consumers, will help boost the government’s revenue.

China will raise the cost of gasoline, lubricants and naphtha by 0.12 yuan (two cents) per liter while the tax on diesel, jet fuel and fuel oil will rise by 0.14 yuan per liter, effective Saturday.

“A great number of our cities have been troubled by relatively large scale, long-lasting and serious smog, affecting the worklife and health of the people,” it said.

The increases will also “guide consumption in the right direction, promote efficient use of oil resources and help promote development of production in the new energy sector,” according to the ministry’s statement, which was first reported by state media.

The taxes will help curb oil consumption. The government expects carbon emissions to peak around 2030 and has pledged to make non-fossil fuels comprise about 20% of the energy mix by then.

The announcement was made as oil prices on global markets tumbled to fresh lows after the Organization of the Petroleum Exporting Countries decided to hold production at previous levels despite concerns about flagging demand and oversupply that threaten the economies of major oil-producing nations.

Government-guided gasoline and other fuel prices have been falling in recent months along with global price levels, and this is giving Beijing room to adjust its tax structure.

China is also benefiting from low levels of consumer inflation, giving the government more room to raise prices.

The consumption tax on unleaded gasoline will rise to 1.12 yuan per liter, while the tax on diesel will increase to 0.94 yuan per liter and the tax on jet fuel also will rise to 0.94 yuan.

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7 Comments on "China Raises Tax on Oil Products"

  1. Davy on Sat, 29th Nov 2014 8:14 am 

    There are as many drivers in the China as the population of the US in an inhabited area not much larger than the US. Does that tell you “Beijing we have a problem” Watch China bumble from one failed growth mitigation effort to another. The failures are because of the size of the challenges and the momentum of growth that was set in motion.

    The only policies that can mitigate the multitude of China’s issues are severe in nature. Reality says China’s only course of action is a sever contraction. This will happen sooner or later but we can be sure that China will continue to pursue failed policies of growth when descent policies are called for. The effort should be on mitigation and adjustment policies for a shit storm coming. This will mean pain suffering and in china’s case death.

    China has a population in severe overshoot so any policy away from growth will mean starvation. China and India are in the worst possible position in this regard. The rest of Asia is likewise in bad shape. The west is in decline and faces more pain and suffering but China will have to stop the train at high speed and reverse course. Anyone ever seen a movie when a train tries to slow quickly. It is a mess and often the train derails. Keep that picture in your head. That is China in the next few years. China is a dead man walking.

  2. Kenz300 on Sat, 29th Nov 2014 8:32 am 

    Every country that subsides oil prices to their consumers should take this opportunity of low oil prices to eliminate their subsidies………

    They will save money in their budgets and when the price does go up it will reflect the true cost of the product to the society.

    Countries that have gas or diesel for under $1.00 are just subsidizing wasteful practices…….

    It is time to end the subsidies for fossil fuels.

  3. bobinget on Sat, 29th Nov 2014 9:04 am 

    Only net (oil) importers have the ‘privilege’ to
    eliminate or lower subsidies.

    Venezuela for one instance, with 60% inflation and a currency losing value daily is in no position politically to raise gasoline and diesel prices. (diesel: .08 cents a gallon)

    http://en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing#Nigeria

  4. Speculawyer on Sat, 29th Nov 2014 3:49 pm 

    But Venezuela MUST raise gas & diesel prices so they can sell that oil to others so they have some money. Otherwise their inflation will just get worse.

  5. Makati1 on Sat, 29th Nov 2014 8:07 pm 

    What would a 1.12 yuan/L (~$0.20/qt.) rise in US gas taxes do to curb waste in the USSA?

    That adds about $0.80/gal. To US prices and would raise about $105 billion dollars in taxes. (2013 EIA figures)

    Not going to happen! Not in the USSA. Not with a failing economy that adds more unemployed to the soup lines every day and more deaths by starvation to the statistics every year.

  6. Kenz300 on Sun, 30th Nov 2014 10:33 am 

    The US GDP was growing at 3.9 % last quarter with a dropping unemployment rate……

  7. Kenz300 on Sun, 30th Nov 2014 10:34 am 

    Facts matter……..

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