Expert: Opportunity to carry out resource tax reform arrives

11:06, April 23, 2010      

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The threat of currency deflation has subsided and currency inflation has not become a reality, said Jia Kang, the director of the Research Institute for Fiscal Science under the Ministry of Finance. He added that this would be a good opportunity to launch resource tax reform.

Properly adjusting the resource tax will certainly and ultimately be able to reduce the excessive production capacity and wash out inefficient enterprises. This will further optimize China's industrial structure.

Resource taxes target all kinds of natural resources, and the aim of collecting resource taxes is to adjust the differential resource incomes and show that it is proper to pay tax for using State-owned natural resources. Resource tax reform is an inevitable step in changing the economic development mode, and reasonable resource tax levels and resource prices are the pre-conditions of properly distributing resources.

Jia said that the prices of China's resource products currently do not reflect their scarcity levels or their supply and demand conditions and the external cost caused by environmental pollution. In addition, the resource prices are quite inflexible, and it is hard for us to encourage energy conservation using prices. The improper resource price-setting mechanism is connected with the deficient tax system and supporting policies.

Now that China has successfully weathered the financial crisis, Jia said, and its economy has returned to a state of growth, it is the perfect opportunity to carry out resource tax reform.

The reform should focus on three aspects. First, the resource tax-collecting mode should be changed from collecting taxes based on the amount to collecting based on the price. Second, the resource tax rate should be raised and third, the area in which the resource tax is collected from should be expanded. In addition, for some special resources, the resource tax could still be collected based on amount. Experts predict that the resource tax rate will be between 3 and 5 percent.

When discussing problems regarding consumer product price increases that may result from the resource tax reform, Jia said that the government should increase the standard of minimum living guarantee so that the living quality of the lowest-income families will not decrease, and the positive effects as a result of the reform will be optimized, while the negative effects will be negated. Families who earn more than the moderate-income families can adjust their consumption to address the pressure as a result of rising prices. Jia added that this is the result they want to get from the policy, and that these people are able to afford it.

Taxation is really not a cure-all, but in front of the historical task of transforming the economic development mode, we cannot do anything without tax measures. We must make full use of the leverage of taxation to support the low energy consumption, intensively exploit new energy resources, economically use the existing resources and accelerate the transformation of China's economic development from the extensive mode to the intensive mode, Jia said.

By People's Daily Online


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