Rao Da said: After the implementation of the fuel tax rate will gradually adjust to place
At the "6th China Automobile Industry Development Summit Annual Conference & 2008 China Automobile & Parts Market Analysis & Forecasting Conference," organized by the China Machinery Industry Federation and the Liaoning Provincial Development and Reform Commission, Chang Rao Da, Secretary of the National Passenger Car Market Information Association, emphasized the need to reevaluate the fuel tax in the context of both automobile development and broader societal transformation. He argued that understanding the rationale behind the fuel tax is essential for its effective implementation.
Rao Da pointed out that while the fuel tax was introduced during a period when automobiles were becoming more integrated into society, it still plays a crucial role in the ongoing transformation of the automotive industry. On one hand, once the fuel tax rate reaches a certain level relative to gasoline prices, it can significantly boost energy efficiency, slowing the growth of oil imports and enhancing national economic security. On the other hand, a well-structured fuel tax can help reshape the country’s energy structure, promoting alternative energy sources and accelerating the transition toward a resource-efficient society.
He noted that the optimal time for implementing the fuel tax was between 2002 and 2003, but the most likely window for action is now, possibly early in 2008. However, Rao Da stressed that the success of the policy does not depend on timing, but rather on the government's commitment and determination.
Despite this, he acknowledged that fully replacing multiple existing fees with a fuel tax is not feasible due to complex contradictions and resistance from various stakeholders. As a result, media speculation about reducing four to six types of fees is unlikely. The most realistic scenario is the reduction of road maintenance fees only. Similarly, claims that a small increase in fuel prices—such as one or two cents per liter—after deducting road tolls are misleading, as they would undermine the strategic purpose of the fuel tax.
Rao Da outlined a phased approach: initially, the fuel tax could be set at 30% to 40% of the gasoline price, which is relatively low globally. However, it would gradually increase over time, allowing for the reduction of other vehicle-related charges. This step-by-step adjustment would also support national efforts to address automobile-related social changes, minimize disruption to the auto industry, and promote fuel conservation. In the long run, China’s fuel tax could approach levels seen in Japan and Hong Kong, where it is around 200% of the oil price—though this would take at least a decade.
He added that while the initial implementation of the fuel tax may have limited impact on the small-displacement vehicle market or the growth of diesel and hybrid vehicles, its influence will grow as the tax increases. Overall, the fuel tax is not just a revenue tool—it is a key policy instrument for driving sustainable development in the automotive sector and beyond.
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