China delays fuel price cuts to prevent hoarding

Shanghai, December 12 (Gasgoo.com) In China's current hot debate over the upcoming fuel tax reform, the majority of the public are in favor of this new policy, said Shanghai Securities News today. The controversial delay of fuel price cuts is intended to prevent the possible hoarding of fuel.

The public discussion about the fuel tax and pricing reform that will take effect on January 1 has raised many tough questions, which largely focus on such aspects: Is the fuel tax high or low? Is it the right time to introduce the fuel tax now? Why not cut the price of fuel before levying tax on it? How to place the road toll collectors? How will the fuel tax be used? How to fix the price? 

As to the fuel tax level and prices, most car owners and drivers in China strongly expect the new policy to follow the global oil market trend. The reform plan will raise gasoline tax from 0.2 yuan per liter to 1 yuan and diesel tax from 0.1 yuan per liter to 0.8 yuan. Meanwhile, it will scrap six fees now charged for road maintenance and management. Fuel prices will be “slightly” cut after the reform kicks off.

The key part of the upcoming fuel tax reform is to replace the previous tax (or fees) for road maintenance with the fuel. That means tens of thousands of road fees (tolls) collectors will have to be laid off and placed to other jobs after the fuel tax reform starts. As for where and how the taxes will be used, some officials said road construction, maintenance and management will need more money.

The majority of the general public agreed to the fuel reform plan, but a most controversial point is why the government has not cut the fuel prices first according to the world's oil price plunge before levying the fuel tax. An industry expert said that if the fuel prices are cut early, some people may hoard the fuel and this will make big troubles in the market.