China's Fuel Tax Policy And Optimization During The Financial Crisis Period: Based On The Dynamic CGE Model Of Fuel Tax

With the rapid development of China economy and accelerating the tax reform, the signification of fuel tax as commodity tax in China is not only the substitution of the road toll, but also the reform of refined oil prices, energy taxes and environmental taxes. Every meaning represents a kind of interest groups, so the design of fuel tax undoubtedly becomes a very difficult and important issue. Compared with foreign fuel tax policy, the system of fuel tax in China isn't so mature that there are some points need to be optimized. At this point and with the view of the science outlook of development, this paper build a dynamic CGE model of the fuel tax to analyze the fuel tax shock in China and discuss the potential optimization. The evaluation target includes the economy effect, energy effect, environment effect and the auto transport effect.The dynamic CGE model of fuel tax is based on MCHUGE model. The paper builds the energy substitution module where considering the substitution relationship among 13 kinds of energy products and 3 kinds of primary factors in produce process, the transports substitution module, the households consumption module with the substitution of energy goods and the substitution of households'transport, the pollution modules containing 9 kinds of pollutant emissions, the imperfect competition modules in the oil sector and automotive manufacturing sector, the auto-fuel module including the equations of sales and inventory of different kinds of autos, and the fuel consumption, the welfare analysis module, the ad valorem tax and the unit tax simulation equations, and the module of analysis in macro-economic, energy and environment. This paper also builds the database of dynamic CGE model of fuel tax correspondingly. Based on the BASEDATA in MCHUGE model, I spit and merge some sectors according to research requirement, and add the new database of EEDATA and CARFUELDATA. This paper readjusts the historical baseline from 2005 to 2007, and characterizes the historical baseline of energy industry, automobile industry and transportation from 1997-2007. Meanwhile, after simulating the potential damage of financial crisis on China's economy and automobile industry, as well as the dynamic effects of"Automobile Industry Promotion Plan", and combining the statistical date of year 2008 and the first half year of 2009, as well as some forecast data from the authority institution, the paper designs the forecast baseline of China's macro economy and the track of the changes in vehicle sales during the financial crisis from 2009 to 2015.Using this model, the paper discusses the current fuel tax, and the potential optimization project, such as tax stage, tax rates as well as the double dividend effect.Currently refined oil pricing mechanism distorts fuel price, and amplifies the economy impact of fuel duty. Meanwhile, in the general equilibrium conditions, the total amount of government revenue less than the fuel tax which will be levied, where the shifted proportion of the fuel tax is greater than 40%. In the simulation, the price of output increases, and the significant damage to economic growth and resident welfare in the short-term. And the long-term effect will slow down. While taking consideration substitution among energy products, the damage decreases significantly. In the view of the industry structure, the output in high energy-intensive industries falls largely, and that of energy industry decrease as fully consideration of substitution among energy products. In the view of energy saving, fuel tax drives the decrease in unit GDP energy consumption by the scale effect and the industrial structure adjustment, particularly in the long-term; however, the substitution effects of energy products offset part of energy saving effects. In the view of pollutant emission, various pollutants decrease significantly by the effect of scale and the industrial structure adjustment, but the pollution emission structure is large differences, where CO2 and SO2 emissions rise contrarily. In the view of demand in motor vehicle, the types of M1L and N2 decline, the type of N3 increases, and the other types slightly decease. The results also show that the sales of gasoline car fall obviously.Compared with the current refined oil pricing mechanism, the pricing mechanism of refined oil decided by market will reduce the economic loss. The shifted proportion of the fuel tax less, and the real GDP and the civilians' welfare increase. Besides, the price of output slightly increases. In sum, the effect of energy conservation and environmental protection perform better. Further comparing with the fuel tax levying in production stage (including import), wholesale stage and retail stage, the policy effects of levying in wholesale stage, such as the economic growth, industrial structure, energy saving, emission reduction and the sales of autos, are between production stage and retail sale stage. However, if taking principle of large tax base, principle of minimum cost and the development direction of energy tax in the future into account, levying in wholesale stage rank first. On the comparative analysis of different fuel tax rates, if considering the substitution of energy products, the relationship between the extent of fuel tax rate and the impacts on economy, energy, environment and motor vehicle sales are non-linear, that is the second derivative doesn't equal zero. Generally speaking, a further increase in fuel tax rate will has a regressive effect on both economic growth and energy saving and emission reduction. Based on the results of researching double dividend effects of fuel tax, this paper finds that when the additional tax revenue was subsidized to factors income where lessening distortion in the factor market, the effects of both dividends are highly significant. In the dynamic view, the long-term double dividend effect is significantly smaller than the short-term one, especially in energy-saving aspect.Finally, the paper points out that the current fuel tax policies have a broad space for optimization, such as further reforming in the refined oil pricing mechanism, levying in the wholesale stage, increasing the fuel tax rates to achieve the effect of double dividend.