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Published on : Jul 08, 2014

Ahead of upcoming resource tax reforms in China, there are indications of electricity, coal, and other resources becoming dearer, said the head researcher of China’s finance ministry on Thursday.

Jia Kang, who heads the Research Institute for Fiscal Science of the Ministry of Finance (MOF), opined in an article in the Shanghai Securities News, said that there have been controversies and difficulties, but the resource tax reform does feature in the work agenda of the current year. He explained his case citing the example of coal. Jia said that based on the new taxation regulations, the new resource tax levied on coal could be in the range of 5% of its sales value. This would replace the existing tax that is based not on sales value, but on output volumes. This move will likely cause the tax per-ton of coal to increase to the tens of yuan, translating into a tax rate that’s 10 times higher than the current rate. 

He also responded to industry concerns in the article. Industry players are worried that they may find it difficult to cope with the higher rate of taxes – leading to losses across the entire coal industry. Jia, in the article said that the taxes would be levied across the entire industry chain, and not specifically on companies. A new pricing mechanism will be put into effect, and this will be highly market-oriented. This move will ensure that the prices of coal and electricity change proportionally. He said that companies and the general public must work towards supporting these policy changes so that China can handle its pollution problems more effectively.