China plans to levy oil excess profit tax
(Chinanews.cn)
Updated: 2006-05-30 14:58
Zhu Jianjun, director of the system reform section under the China National
Petroleum Corporation's development research department, revealed that based on
three major changes facing the oil industry, related departments are working
over to raise petroleum resource tax and planning to levy excess profit tax.
It is learned that the changes in global oil supply-demand situation are
mainly reflected in Asian and Pacific regions' consumption growth. It is
predicted that the Asian and Pacific regions will overtake North America in oil
consumption and become the largest oil consumer in the world this year. At
present, Asia's dependency on oil import has exceeded 70%.
China's dependency on oil import will also increase consequently. Zhu
estimated that by 2020, China's oil consumption will reach 450 to 500 megatons
while domestic output will amount to 200 megatons, which means that China's oil
import dependency will go up to 60% and its oil supply will shift from domestic
market-oriented to overseas market-oriented. In terms of international oil
price, Zhu believes that the average oil price will range from 55 to 60 US
dollars per barrel in 2006 and it is unlikely to drop to below 40 US dollars per
barrel in the coming two or three years.
Zhu added that China's related departments are studying on the adjustment of
oil industry-related polices. "China's oil resource tax consists of several
tiers and the level is obviously lower than that of foreign countries. Hence
China needs to adjust related policies and the base of oil resource tax will be
raised by a large margin." said Zhu. He also revealed that China would impose
excess profit tax on the oil industry. Profits of upstream oil production when
the price is over 40 US dollars will be collected by the government for a second
distribution to subsidize industries and institutions affected by oil price
hike, such as transportation and oil refining.
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