Coal Resources Tax Reform Approaching

By CnAgri2014-01-20 09:19:45 Print Since “ad valorem” reforms of crude oil and natural gas resources taxes were implemented in 2011, coal resources reform is also on the way. According to Economic Information Daily, the reform will be made in 2014. Currently, “clearing payment” is busily made in all provinces with abundant coal resources, such as Shanxi, Inner Mongolia and Guizhou, which indicates coal resources tax reform is impending. Besides, it is also advocated in the Third Plenary Session of the 18th Central Committee of the Chinese Communist Party to accelerate resources tax reform and implement paid use and ecological compensation system. In Central Economic Work Conference, it is also specified that resources tax reform will be one of the key works in 2014.
Current specific tax has some shortcomings. Firstly, coal price has seen great change in recent years from a dozen yuan to hundreds of yuan and specific tax is hard to protect public rights and benefits when price rises sharply.  Secondly, it is difficult to price coal by classifying the physical and chemical properties of each coal variety. Besides, ad valorem will promote rational development and utilization of coal resources to reduce waste.

Many coal enterprises showed concerns of the reform. With current way of tax payment, te added tax is about RMB99-130/MT, which is already a heavy burden to enterprises. If the tax is levied in the way of ad valorem, the payment shall increase RMB5-10/MT.

Cost increase of coal enterprises will inevitably influence fertilizer industry. Since coal used in fertilizer enterprises accounted little in whole coal market(less than 10%) and about 70% urea manufacturers used coal as raw materials,  fertilizer manufacturers have little right in bargaining and fertilizer industry is vulnerable to be influenced by raw material price change. Therefore, fertilizer enterprises’ resource environment will be more severe. But the integration and optimization of fertilizer industry will be further promoted, favorable for its healthy development.

From “China Fertilizer Market Weekly Report”