Political And Economic Analysis Of China's Fuel Tax Reform

The fuel tax reform is part of China's transportation and vehicle tax reform and an important move towards further deepening and improving the financial and tax system reform. However, the fuel tax reform has failed to be implemented and been stuck in a kind of dilemma since it was proposed more than 10 years ago. This paper provides a political and economic analysis of issues relating to China's fuel tax reform.Part I gives a brief description of the background and practical significance of the fuel tax reform. The introduction of the background is focused on China's existing fee charging system and prominent problems with China's transportation and vehicle fee charging, and the significance of the reform is illustrated in three aspects– taxation, oil (energy) strategic safety, and ecological environmental protection and sustainable development.Part II elaborates on the historic evolution of the fuel tax reform and analyzes the popularized interpretation of the dilemma of the fuel tax reform, including the open interpretation of high oil prices and interpretation with regard to the fee collection process, tax rate and tax burden unfairness, oil product smuggling and tax evasion, and other specific operations, pointing out that these causes are not the intrinsic fundamental reasons for the dilemma of the fuel tax. Then, this part analyzes the intrinsic causes of the dilemma of the fuel tax and fee reform from the perspectives of system transformation, interested groups, and public choice.Part III conducts a game analysis of a few pairs of interest entities, including the transportation department and the tax department, the central government and the local government, and the government and state-owned monopolistic oil company, and further exposes the intrinsic causes of the dilemma of the fuel tax reform.Part IV proposes the strategic choice, guidelines and fundamental principles of China's fuel tax reform and then proceeds to put forward specific strategies.