China to Increase Fuel Tax to Curb Pollution, Carbon Emissions

China increased its fuel-consumption tax the first time in five years amid falling global oil prices as part of steps to fight pollution and cut carbon emissions.

China will boost the tax on gasoline, naphtha, solvent oil and lubricating oil by 0.12 yuan a liter, according to a statement posted on the Ministry of Finance’s website yesterday. The levy on diesel, jet fuel and fuel oil will increase by 0.14 yuan a liter. The new levels are effective starting today.

The nation is seeking fight pollution and improve energy efficiency amid record smog levels in cities including Beijing and Shanghai. Chinese President Xi Jinping in a pact with U.S. opposite Barack Obama agreed to cap China’s carbon emissions by 2030 and turn to renewable sources for 20 percent of the country’s energy.

The government will use the added revenue to combat pollution, address climate change and improve public health and the environment, according to a separate statement. The fund will also be used to encourage new energy car development, the ministry’s tax division said in a statement.

“Increasing the fuel consumption price to a suitable level can not only help to curb pollution, reduce emissions, guide rational consumption demand, promote efficient usage of oil, but also can help the development of a new-energy industry,” the tax division said.

The price of gasoline and diesel will be unchanged after the increase due to falling global oil prices, the ministry said. The tax rise is the first in five years, according to Shandong-based energy consultancy SCI99. Brent crude, one of several crude grades monitored by the government in Beijing, has fallen 30 percent this year.

The country will also stop collecting some taxes on small displacement motorcycles to aid low income groups, the ministry said. Consumption taxes on vehicle tires and alcohol and leaded gasoline will also be scrapped.

— With assistance by Xiaoqing Pi

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