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China to Extend Oil, Gas Resource Tax Nationwide Next Month

China will extend a value-based tax on sales of oil and natural gas nationwide starting next month to help save energy in the world’s fastest-growing major economy and boost local government revenues to develop inland provinces.

The oil and gas tax, ranging from 5 to 10 percent of sales, will be levied on both domestic producers and joint ventures with overseas companies, the Ministry of Finance said in a statement today. China will impose a value-based tax on other commodities when the time is right, it said.

China, which currently levies the tax based on volume, rolled out a 5 percent tax on oil and gas sales in Xinjiang on a trial basis in June last year to help fund development of the western province. The new regulation may crimp the earnings of companies including PetroChina Co. and China Petroleum & Chemical Corp. (600028), known as Sinopec.

“The tax change will slash our earnings forecast for PetroChina and Sinopec by 2 percent in 2011 and 11 percent in 2012,” Anna Yu, a Hong Kong-based energy analyst with ICBC International Research Ltd., said by telephone.

PetroChina fell 1.7 percent to close at HK$9.02 in Hong Kong trading, while Sinopec declined 1 percent to HK$7.09. The benchmark Hang Seng Index gained 2.4 percent.

Cnooc Ltd. (883), China’s biggest offshore energy explorer, advanced 3.9 percent to HK$13.72, the highest since Sept. 16. Ventures with overseas partners account for 31 percent of the company’s projects, according to ICBC’s Yu.

“The impact on Cnooc should be non-material given the tax is replacing royalties that offshore explorers currently pay,” she said.

Funds for Development

The government is planning 23 projects in West China at a cost of 682.2 billion yuan ($107 billion), the National Development and Reform Commission, the country’s top economic planner, said last year. The projects include the construction of roads and railways, wind farms and a nuclear power plant.

“China will likely apply a 5 percent tax rate nationwide in the short term as they did in the western regions,” said Qiu Xiaofeng, an analyst at Beijing-based Galaxy Securities Co. “A 10 percent rate would be too heavy for oil and gas producers.”

China Shenhua Energy Co., the country’s biggest coal producer, was unchanged at HK$31, while China Coal Energy Co. surged 6.9 percent to HK$8.17.

“Tax levies on coal mining are still volume-based and Chinese listed coal miners currently pay taxes within today’s range,” Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd., said by telephone. “We don’t expect the government to change the tax to a value-based one in the short term as they did to oil and gas.”

Coal, Metals

On a volume basis, China will levy a tax of 8 to 20 yuan on every metric ton of coking coal sold and 0.3 to 5 yuan a ton for other coal grades starting next month, the government said yesterday, without stating current tax rates.

The tax on coking coal is 8 yuan a ton at present and 0.3 to 5 yuan a ton for other coal grades, according to ICBC’s Yu.

Starting in November, the levy on iron ore sales will be 2 to 30 yuan a ton, the tax on rare-earth minerals 0.4 to 60 yuan a ton, and the rate on nonferrous metal ore 0.4 to 30 yuan a ton, according to the government.

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net.

Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.

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Key Rates

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Today’s national average mortgage rates. Rates may include points.
Type Today 1 Mo
30 Year Fixed Jumbo 4.03% 3.94%
30 Year Fixed 3.77% 3.47%
15 Year Fixed 2.88% 2.71%
10 Year Fixed 2.98% 3.00%
30 Year Fixed Refi 3.76% 3.46%
15 Year Fixed Refi 2.88% 2.68%
5/1 ARM 2.66% 2.61%
5/1 ARM Refi 2.64% 2.56%
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Source: Bankrate.com

Today’s average home equity rates nationwide.
Type Today 1 Mo
$30K HELOC 5.34% 5.24%
$50K HELOC 4.56% 4.53%
$75K HELOC 4.57% 4.53%
$100K HELOC 4.27% 4.21%
$30K Home Equity Loan 5.95% 6.06%
$50K Home Equity Loan 5.97% 6.02%
$75K Home Equity Loan 5.94% 5.99%
$100K Home Equity Loan 5.80% 5.84%
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Source: Bankrate.com

Today’s average savings rates nationwide.
Type Today 1 Mo
5 Year CD 1.24% 1.21%
2 Year CD 0.70% 0.66%
1 Year CD 0.57% 0.52%
MMA $10K+ 0.47% 0.50%
MMA $50K+ 0.69% 0.70%
MMA Savings Jumbo 0.58% 0.60%
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Source: Bankrate.com

Today’s average auto loan rates nationwide.
Type Today 1 Mo
60 Months Used Car 2.97% 3.19%
48 Months Used Car 2.92% 3.13%
36 Months Used Car 2.88% 2.96%
72 Months New Car 2.45% 2.96%
60 Months New Car 2.54% 2.67%
48 Months New Car 2.45% 2.58%
60 Months Auto Refi 4.15% 4.36%
36 Months Auto Refi 3.60% 3.76%
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Today’s average credit card rates nationwide.
Type Today 1 Mo
Standard Variable 14.12% 14.12%
Standard Fixed 13.23% 13.23%
Gold Variable 12.70% 12.70%
Gold Fixed 11.99% 11.99%
Platinum Variable 15.53% 15.57%
Platinum Fixed 12.70% 12.70%
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