It remains unclear whether fuel oil taxation will be introduced in the near future, as government officials and analysts differ on the issue.

Sources from the National Development and Reform Commission (NDRC) say they expect the tax to come into being on January 1, 2006.

A senior analyst in charge of transportation management research at the NDRC's research institute revealed the date.

"The government might start imposing fuel oil taxation when the international oil price stabilizes," said the analyst, who predicted next year would be the likely time of its introduction.

"Imposing the tax when the oil price stabilizes will trigger less shake-ups in the domestic market," he said.

Chen Qingtai, vice-director of the State Council Development Research Centre, told the China Automobile Summit at the end of last year that the authorities had basically worked out the taxation proposal, and were waiting for an "appropriate time" to carry it out, but he did not specify a detailed schedule.

The NDRC analyst predicted another possible date to begin the tax - July 1 this year.

However, some analysts do not agree with this prediction.

Ni Hongri, a senior researcher from the State Council Development Research Centre, ruled out the possibility of implementing the tax this year.

The taxation proposal is not well developed enough, he said, given the complicated effects that it might have.

The tax, when implemented, will have a far-reaching influence on many industries including energy, automobile and transportation, and will affect a number of government departments involved in pricing, taxation and energy resource development.

The interests of different departments might conflict over the tax, experts said.

For example, government bodies in charge of transportation are supposed to have different opinions from the petrochemical companies on the tax, said Song Bingshen, an analyst with China Securities.

Zhao Zhiyun, an analyst at the Ministry of Science and Technology, agreed with Ni in that the country would not impose the fuel oil tax this year.

He explained automobile owners have already paid their annual road maintenance fees for this year, and it would not be feasible for the government to return the paid fees when the tax is imposed.

According to the taxation proposal, the fuel oil tax will replace the annual road maintenance fee.

"If the government intends to impose the tax this year, it would let automobile owners pay their road maintenance fees either monthly or quarterly, not for the entire year," said Zhao.

"So the government's move to charge for the entire year's road maintenances does not indicate its intention to start taxing fuel oil this year," he said.

Another undecided factor is how to impose the tax, said some analysts.

The fuel oil tax can be imposed in either the production or distribution of oil products, according to industry sources.

Source: China Daily