China's tax rate for coal resources is expected to be raised soon from 1 to 3 percent in a bid to rein in the coarse consumption of coal, one of the most important power energy in the country.

Sun Youhai, director of the Office of Proposed Law under the Environmental Protection and Resource Conservation Committee of China's National People's Congress, is seen in this photo dated January 2007. [CRI]

The plan for the new coal tax rate has been submitted to the State Council, China's cabinet, for consideration and approval, said Sun Youhai, an official on the environmental protection and resource conservation committee of the National People's Congress, China's top legislature.

According to official figures quoted Wednesday by China Business News, China's consumption of coal products in 2006 totalled about 2.4 billion tons, accounting for nearly 70 percent of the country's total energy use for the whole year.

Liu Heng with China's Central University of Finance and Economics also told the newspaper that the new tax rate on coal resources will serve as a benchmark for other mineral resources considering its dominant position.

Meanwhile, Wang Ye, an analyst on the trade of coal with Citic Securities, said the tax will be levied in accordance with the value of the coal products and coal enterprises will shoulder the increase of 6.5 to 7 yuan in taxes on the sale of every ton of coal. Currently the price of coal is set at 350 yuan per ton, with a profit at 50 yuan.

Wang believes that the hike in coal resources tax will have only a short-term impact on coal enterprises. However, the burden might be shifted to coal consuming enterprises in the electricity, steel and chemical sectors later on.

Coal experts believe that nation's coal supply will become relatively strained next year against the backdrop of rising oil prices. It is widely estimated that the price of ordinary coal products will increase by 12 to 15 percent next year, with some precious ones being hike by around 20 percent.

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