Coal, electricity prices expected to rise

The prices for coal, electricity and other resources in China are expected to rise as a result of the upcoming reform of the resource tax, the finance ministry's head researcher said Thursday.

"Despite controversies and difficulties, the reform of the resource tax has been put on this year's work agenda. Let's wait and see," Jia Kang, head of the Research Institute for Fiscal Science of the Ministry of Finance (MOF), wrote in an article published in the Shanghai Securities News.

The expert took coal as an example. According to the new taxation rules, the resource tax on coal, which Jia presumed would be around 5 percent of the coal sales value, would replace the current tax based on output volumes.

This might increase the tax on each ton of coal to the tens of yuan, nearly ten times higher than the current tax, Jia said.

As for complaints from coal companies that they may not be able to cope with the higher tax, leading to industry-wide losses, Jia said the added taxes would not solely fall on companies, but be distributed along the whole industrial chain.

There will be a new market-oriented pricing mechanism in which the prices for coal and electricity will move in tandem, he said.

Companies and ordinary people are not happy with the smog, but whenever they hear that resource prices will rise as a result of policies to tackle the problem, they find it unacceptable, he said.

It is not only the task of the government to reduce energy consumption and smog, but companies and ordinary people must also share the responsibility, he added.

The expert also said the government, when pushing forward resource tax reform, should take into consideration the ability of companies to bear the extra burden, and increase subsistence allowances accordingly for low-income residents.

The remarks came just after the central leadership of the Communist Party of China (CPC) announced on Monday that the country would try to build a comprehensive, transparent and efficient fiscal and tax system by deepening reforms in the coming years.

Optimization of the tax system is high on the agenda, according to a statement released after a meeting of the Political Bureau of the CPC Central Committee, presided over by its general secretary, Xi Jinping.