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China to tax sales of oil and gas | China to tax sales of oil and gas |
(1 day later) | |
The tax will placate local government demands for a share in local resources. | The tax will placate local government demands for a share in local resources. |
China has confirmed that a new tax on sales of primary resources will be rolled out nationwide. | China has confirmed that a new tax on sales of primary resources will be rolled out nationwide. |
The 5% tax is being tested in the western province of Xinjiang, with revenues going to the local government. | The 5% tax is being tested in the western province of Xinjiang, with revenues going to the local government. |
Beijing also plans to tax other raw materials, although the tax rate may vary, a government spokesman said. | Beijing also plans to tax other raw materials, although the tax rate may vary, a government spokesman said. |
"The reform will clearly increase the local fiscal income of the resource-rich western regions," said Du Ying of the Chinese planning agency. | "The reform will clearly increase the local fiscal income of the resource-rich western regions," said Du Ying of the Chinese planning agency. |
Before going nationwide, the tax will first be rolled out across the other Western regions of China - including Tibet - and will be extended to coal sales. | Before going nationwide, the tax will first be rolled out across the other Western regions of China - including Tibet - and will be extended to coal sales. |
Local demands | Local demands |
The resources tax will meet demands from local government for more fiscal autonomy. | The resources tax will meet demands from local government for more fiscal autonomy. |
In Xinjiang - which has significant commodity deposits - there was already a tax on oil and gas output, which will now be replaced by the new sales tax. | In Xinjiang - which has significant commodity deposits - there was already a tax on oil and gas output, which will now be replaced by the new sales tax. |
Mr Du said that the sales tax was expected to increase revenues for the vast northwestern region. | Mr Du said that the sales tax was expected to increase revenues for the vast northwestern region. |
Xinjiang is predominately Muslim, and is home to the minority Uighur people. | |
Like neighbouring Tibet, the region has been struck in recent years by growing protests - both violent and non-violent - for greater autonomy or independence. | Like neighbouring Tibet, the region has been struck in recent years by growing protests - both violent and non-violent - for greater autonomy or independence. |
However, the tax proceeds may be used to promote a process of industrial development and urbanisation that has gone hand-in-hand with immigration of ethnic Chinese into the region. | However, the tax proceeds may be used to promote a process of industrial development and urbanisation that has gone hand-in-hand with immigration of ethnic Chinese into the region. |
The nationwide resources tax is likely to be welcomed by regional governments, which have seen their borrowing restricted by the central government in Beijing. | The nationwide resources tax is likely to be welcomed by regional governments, which have seen their borrowing restricted by the central government in Beijing. |
Many Chinese local governments have borrowed against state-owned land at a time when China is thought to be suffering from a real estate bubble. | Many Chinese local governments have borrowed against state-owned land at a time when China is thought to be suffering from a real estate bubble. |
They have also in some cases borrowed from international banks, something that the Beijing authorities say is illegal. | They have also in some cases borrowed from international banks, something that the Beijing authorities say is illegal. |
Energy prices | Energy prices |
The tax may offset the impact on domestic energy and commodity prices of a recent shift in China's exchange rate policy. | The tax may offset the impact on domestic energy and commodity prices of a recent shift in China's exchange rate policy. |
The new "flexible" yuan policy is widely expected to allow the Chinese currency to increase in value against the dollar over the coming months. | The new "flexible" yuan policy is widely expected to allow the Chinese currency to increase in value against the dollar over the coming months. |
This would make the cost of commodity and energy imports - on which the Chinese economy is heavily dependent - cheaper. | This would make the cost of commodity and energy imports - on which the Chinese economy is heavily dependent - cheaper. |
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