China plans to impose a nationwide tax on production of oil and other resources, a state newspaper said Wednesday, in a move to raise money for poor areas and ease public anger at the wealth of government energy companies.
Beijing began a trial of the tax in June in oil-rich Xinjiang in the northwest, a Muslim region where ethnic tensions erupted in rioting in 2009 that killed nearly 200 people. A key complaint in minority areas is that they get little of the wealth extracted by Chinese oil and mining companies, most of which flows to Beijing.
The tax will be expanded nationwide within five years and will cover production of oil, gas, coal and other resources, the China Daily said. It cited comments by Finance Minister Xie Xuren and information from the Cabinet's planning agency, the National Development and Reform Commission.
The tax is part of reforms aimed at broadening revenue sources for local governments and reducing heavy reliance on land sales, Xie said. The communist government faces widespread protests over evictions of farmers and other residents by local governments to make way for real estate development.
Xie cited "uneven regional and urban-rural development," a reference to the economic gulf between China's booming eastern cities and the poor West.
At a conference last May on how to defuse tensions in Xinjiang, President Hu Jintao said revenues from the resource tax "should be focused on improving local people's lives."
The tax will cut into profits at government oil companies, possibly helping to defuse public irritation at the windfall they have enjoyed as Chinese demand soars. The biggest oil producer, PetroChina Ltd., reported a $9.6 billion profit for the first half of last year, or nearly $2.2 million per hour.
Critics say energy companies and their well-paid bosses benefit from official favors and profit unfairly at the expense of China's public.
Minority areas such as Xinjiang and Tibet are among China's poorest despite producing a large share of its oil, gas and minerals.
In Xinjiang, the tax was set at 5 percent of the value of oil produced, but the China Daily report gave no details of how it might be applied in Tibet, a major copper- and gold-producing region. It cited Xie as saying local authorities would decide on rates and other details.
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