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An official with the Ministry of Finance (MOF) said Wednesday that there exists great difficulty in the levy of fuel oil tax.

 

"There is no timetable for China's fuel oil tax levy," said Su Ming, deputy director of the research institute of the MOF. How to levy fuel oil tax on farmers is the biggest problem, he said.

 

According to Su, Chinese farmers spent 30 billion yuan (US$3.7 billion) in diesel oil in 2002. The sum doubled to 60 billion yuan in 2004.

 

Besides, the bearing capacity for oil price of the common people is another factor affecting the levy of fuel oil tax, said Su.

 

A circular jointly issued by the MOF and the State Administration of Taxation last week said that China will collect a consumption tax on naphtha, solvent, lubricant at a rate of 0.2 yuan per liter and 0.1 yuan per liter for aviation fuel and fuel oil.

 

The levy of consumption tax on fuel oil could be deemed as a compensation for the delay of the fuel oil taxation, said Su.

 

China announced to lift the prices of processed oil while setting up a mechanism to offer subsidies to disadvantaged communities and public service sectors as well as collect special fees from oil producers who sell domestic produced crude oil.

 

Su said that to impose fees from oil mining sectors while offer subsidies to disadvantaged communities and public services will be good for improving the efficiency of China's oil mining, breaking up the monopoly of oil mining industry and increasing expenditure of the government on oil mining.

 

(Xinhua News Agency March 30, 2006)