The Study On Fiscal And Taxation Policy Of Natural Gas Industry In China

Natural gas is clean energy and plays a very important role in improving China’s energystructure, reducing the emission of greenhouse gas and developing low-carbon economy.China’s natural gas industry develops rapidly in recent years, but the growth rate of naturalgas production is far lower than that of consumption. Since2007, our country has become netimporter of natural gas while external dependency on natural gas is increasing year by yearand reached22%in2011. Energy consumption has large inertia. Although natural gasproduction in our country will increase in the future decades, the growth rate is far lower thanthat of demand, and the gap between supply and demand will be further widened. As Chinahas adopted low price policy on natural gas for a long time, it leads most of the domestic gasfields to a state of losses or low profit while enterprises have little investment enthusiasm, as aresult, national fiscal and taxation policy is important to enhence gas exploration anddevelopment. Healthy development of gas industry has close relation with price, fiscal and aswell as taxation policy. However, we have not yet established pricing mechanism to reflectthe resources scarcity and changes of market supply and demand as well as the lack of targetfiscal and taxation policy to promote healthy development of gas industry. This research putsforward constructive suggestions to establish the fiscal and taxation policy which is suitablefor China’s natural gas industry characteristics and development phase, meanwhile it will helpto promote the healthy development of natural gas industry in China.Firstly, according to the background theory and practice research of natural gas industry,it emphasizes the necessity of fiscal and taxation policy, and the theoretical and practicalsignificance of fiscal and taxation policy. With the review of the literature, it also defines thefiscal and taxation policy of natural gas industry in China.Secondly, it illustrates the course of the fiscal and taxation policy reform. The influenceof the fiscal and taxation policy reform on natural gas industry is analyzed while the existingproblems in the fiscal and taxation policy in China are summarized. Thirdly, in order to indicate the direction to fiscal and taxation policy reform of naturalgas industry in China and reduce the risk of policy changes, this paper studies the fiscal andtaxation policy of natural gas industry by means of system dynamics. At first, by using causalloop diagram, it analyzes the influence of value added tax, business tax, income tax, resourcetax and other taxes and fees, gas price and alternative energy price, government priceregulation on natural gas exploration, development, production and comprehensive influenceof each fiscal and taxation policy on natural gas industry. Then on the basis of causal loopdiagram, it uses system dynamics modeling to test influence degree of each fiscal and taxationpolicy on natural gas supply and demand, and analyzes the results of each fiscal and taxationpolicy. It tests the influence of raising natural gas price, reducing tax rates, improvingtechnology innovation on natural gas industry. By the guidance of causal loop diagramanalysis and simulation results, it proposes the problems of fiscal and taxation policy reformof natural gas industry in China.Fourthly, with the help of analysis on classical economics model, it analyzes costcharacteristics of natural gas and pricing behavior of natural gas production enterprises, aswell as the effect of price controlling in monopoly enterprises. It uses the game theory toanalyze the influence factors of pricing behavior in natural gas production enterprises andcompares the impact of different policies such as tax, price limit on the equilibrium solutionas well as the research of the necessity and level of gas price regulation in China. Accordingto the results of the traditional economics theory and game theory analysis, it provides furthertheoretical guidance of pricing mechanism reform in natural gas industry.Fifthly, with many years’ practice, the main western oil production countries havegradually formed the system of fiscal and taxation policy to adjust to the links of natural gasexploration, production, reserves, processing, consumption, etc. This paper introduces thefiscal and taxation policy of natural gas industry in the United Kingdom, the United States,Russia, Australia and other main western oil producers and summarizes the enlightenment ofsuccessful experience to our country.Lastly, after analizing the existing problems of the fiscal and taxation policy of natural gasindustry in China, and with the main oil producing countries’ experience as well as theguidance of traditional economics theory, game theory and system dynamics analysis results, this paper puts forward the fiscal and taxation policy suggestions to promote the developmentof natural gas industry in China.