Feb. 23, 2007 (China Knowledge) – The World Bank is advising China to implement a fuel tax to raise additional revenue for generating employment as well as energy conservation.

 "The reason for moving now on the fuel tax is simple: a time of falling oil prices is a good time to consider introducing the tax: people are already used to higher fuel prices, and rather than passing on the reduction in oil prices on the world market to consumers, the government can introduce the tax without additional pain," the bank said in its recently-released China Quarterly Update.

The report also said that a fuel tax is easily administered because there are only a few fuel producers, and taxation “at the source” is easy. Therefore, the bank suggests that the Chinese government need not wait for a fuel tax before a road fund, if any, will be ready. Instead, it can consider retaining the current road maintenance tax while using the receipts of a fuel tax for other purposes. Once decisions on a road fund are made, the road maintenance fee can be abolished, and the fuel tax increased with an equivalent amount, the bank said.

The bank's suggestion came ahead of the full session of the National People's Congress (NPC) starting from Mar. 5. The NPC, China's top legislature has, in the past, postponed a decision to levy a fuel tax on the people.