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Policymakers have talked about introducing a fuel tax for more than a decade. Now, the country's urgent need to raise energy efficiency makes it the right time to bring the tax into reality.

 

Just one day before China announced its action plan on climate change Monday, the State Council issued a circular urging local governments and companies around the country to implement the General Work Plan for Energy Conservation and Pollutant Discharge Reduction.

 

Amid these considerably increased national concerns, the National Development and Reform Commission (NDRC), the country's pricing authority, again raised the issue of replacing the much-criticized road tolls with a fuel tax.

 

The tolls do not tax drivers according to the amount of fuel their vehicles burn so fail to encourage greater fuel economy.

 

The tax-for-fee reform has long been postponed partly because of concern over the impact a uniform fuel tax may exert on low-income groups and partly out of consideration for the employment of hundreds of thousands of toll collectors across the country.

 

But the country's growing fiscal strength makes it possible to adequately compensate low-income groups who are disproportionately affected by the fuel tax.

 

At the same time, a national consensus exists on increasing energy efficiency in the interest of sustainable development. This makes the introduction of a fuel tax that encourages more efficient fuel consumption an idea whose time has come.

 

For a developing country like China, technology is key to cutting pollution and raising energy efficiency.

 

But it is equally, if not more, important to put in place strong market incentives to guide economic development and environmental protection.

 

A fuel tax raises awareness of the cost of energy. As people become more cost-conscious about fuel consumption, hopefully they will join the government in pressing enterprises to provide more energy-saving products.

 

Soaring oil prices in recent years only added to the difficulties of imposing a fuel tax. But failure to hit last year's target for saving energy and reducing greenhouse gas emissions shows the country cannot afford any more delay in the tax-for-fee reform.

 

(China Daily June 6, 2007)