China triples fuel oil consumption tax from Jan

China is charging the full rate of consumption tax for fuel oil that is backdated to Jan. 1 by tripling an earlier levy, a move traders say could squeeze oil products supply from refiners that use the residue fuel as feedstock.
The increases, announced just about a week ago and which traders expected would be backdated to include transactions in January and part of February, also applies to naphtha, used as a petrochemical feedstock and blending component for gasoline.
The move was among a broad set of fiscal policies Beijing ushered in since 2006 aimed at curbing resource-intensive sectors and boost energy saving.
The new consumption tax for fuel oil, which applies to both domestic production and imports, is set at about 101 yuan a tonne ($14), versus a previous 30.45 yuan in place since April 2006, said two trading sources who received the government document on the tax change.
China, Asia’s biggest fuel oil importer, started to levy consumption tax on fuel oil and naphtha from April 2006, but kicked off with a 30 percent rate for both products. At that time Beijing did not say when it would charge the full rates.
Under the new tax scheme, naphtha would be charged at a full rate of 0.20 yuan per litre, traders said.
The government had not changed the tax rates for gasoline and diesel in 2006. The rates have stood at 0.10 yuan a litre for diesel and 0.20 yuan for gasoline till now.
Officials from related government agencies could not be immediately reached for comment.
Oil traders, surprised by the sudden tax increases, said the policy would deal another blow to China’s fuel oil market, already reeling from weakening demand due to record-high global prices and rising competition from cleaner fuels such as natural gas.

Guardian