China is considering changing resources tax into ad valorem tax from unit tax with a reform plan being discussed, said Wang Min, Vice Minister of Land Resources at China Mining 2007 in Beijing.

   The new schedule would adopt ad valorem tax system on crude oil, natural gas, coal etc., and levy resources tax on mineral water products.

   Experts said that existing resources tax should be extended to more items such as minerals and salt for the time being to attain reasonable development and utilization of resources. Besides, low tax rate results in the undervalued resources prices, which is not conducive to improve enterprises and national economic growth model.

   Low resources cost led to serious wastes in the past, and ad valorem tax system will help realize scientific resources utilization given burgeoning resources prices in recent years, said An Tifu of Chinese Taxation Institute.

   Plus, resources tax reform will boost local governmental fiscal revenue in western China and help reduce income gap between China's eastern and western areas, given most resources reserved in west China and consumed in the east.

   As for worries on the expected cost hikes for coal miners, oil and non-ferrous metal enterprises, analysts said that upstream companies would transfer the cost via product price hikes, and they won't get hurt in medium and long-term of perspective.

   During the first half of 2007, China collected 13.4 billion yuan of resources taxes up 31.8 percent year-on-year, with some provinces seeing over 50 percent increases.

   New resources tax reform scheme would be announced soon, since consensus has been reached among various departments and experts. In November of 2006, the draft of resources tax reform program was released to the public for suggestions and advices.