Economy

China to impose resource tax nationwide

(Agencies)
Updated: 2010-07-08 11:46

BEIJING - China will impose nationwide a tax on oil and gas drilling and other resource industries to raise money for development in poor western regions, an official said Thursday.

Beijing is carrying out a test of such a tax in its oil-rich western region of Xinjiang and plans to expand it gradually to the whole country, said Du Ying, a vice chairman of the country's planning agency, the National Development and Reform Commission.

"The reform will clearly increase the local fiscal income of the resource-rich western regions," Du said at a news conference. He gave no timetable for expanding the tax.

Related readings:  China to implement resource tax in western regions  t5% tax on oil, gas in Xinjiang  Mining tax move cheers investors  Axing of resource tax proposed

The 5 percent tax in Xinjiang, imposed last month, is part of efforts to develop the region.

Du said the level of the tax, once imposed nationwide, might vary from product to product.

The resource tax reform is part of a new support measures for western China.

The NDRC announced this week that Beijing will invest 682 billion yuan ($101 billion) in 23 projects in 2010 in its western regions.

The resource tax will increase costs for resource producers, said Jing Ulrich, JP Morgan's chairwoman for China equities, in a report to clients.

Xinjiang produced about 13 percent of China's crude in 2009, according to the Xinhua News Agency. It said June that the tax in Xinjiang could raise 4 to 5 billion yuan ($580 million to $730 million) a year.