Fuel Tax to put 1rmb on every litre of gas, savings for some, or not

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The Chinese Governments body for over viewing issues such as car consumption, and the price of gas at the pump, The National Development and Reform Commission (NDRC) announced earlier this month that they planned to add around 1rmb to every litre of gas sold at the pump to replace the road tax fee.

The road tax fee is based on a vehicles weight, and the number of seats. So a 7 seater MPV will pay more than a 5 seat sedan. According to the government, the cancellation of road tax and the increase on fuel tax would help private families save more on their motoring. However, farmers would have been hit hard on the new scheme, previously their agricultural vehicles did not have to pay road tax, but they do have to pay for fuel, and a further increase in fuel is only likely to give them an extra burden.

So would the cancellation of road tax save us any money? In the tail end of 2008, even China Car Times has scaled back its corporate spending, so if we can save a few pennies on gas, we’d be even happier.

China Car Times currently pays 160rmb per month for a compact SUV, and a further 110rmb for a small MPV.  We’ll talk about the SUV first, as the SUV is driven the most and the MPV only used on days when it is required, it only gets filled up with 150rmb’s worth of fuel every two or three weeks. The SUV is filled up once a week with 200rmb’s worth of no 93 which is about 6.09rmb at the pump, so we get about 32.8litres of gas. The SUV does about 10l per 100km of driving (in the city, usually with a lead foot at the pedal) but fairs better on the highway at 6.8l (although Ive seen as low as 6.5l) so in an average weeks worth of driving, we’re doing around 300km at a cost of1.5rmb per kilometer.

One weeks driving under the current setup comes to 200rmb (fuel) +  40rmb per week road tax = 240rmb per week. Im not including insurance in this scenario, as that’s a whole different story!

Under the new scheme we’d have to pay a hypothetical tax of 1rmb on each liter, making fuel at the pump 7.09rmb, we still want 32 litres worth of fuel to see us through the week so thats 7.09rmb x 32 =  226rmb for the week. We dont have to pay road tax anymore thanks to that, so the total saving is 13.12rmb per week or 52.48rmb per month, thats an extra 12 bottles of Qingdao beer per month.

However, any savings that CCT might actually save are certainly out of the window now, as the NDRC announced today that they wont implement the gas tax just yet, they’ve been thinking of doing it since 1994