Must levied a windfall tax on resource monopoly giants: tax authorities are on the agenda

According to reports, some experts disclosed recently that the State Administration of Taxation is conducting feasibility studies, reforming the existing rigid oil resource tax model, and considering the changes in oil prices and the difficulty of mining while taxing. Some experts also stated more clearly that the taxation department has put the tax on resource windfall on the agenda.
In recent years, as the prices of various mineral products, especially petroleum and coal, have risen sharply, the profits of resource companies have increased dramatically. On the other hand, the government’s tax revenue has not grown at such a high rate. This is determined by the tax structure of the resource tax. The resource tax has two major characteristics: First, taxes are not calculated on the basis of sales. Instead, taxes are calculated on the basis of output, and price increase factors are not reflected in taxes. Second, the fixed tax will be determined by the tax authority and will remain unchanged for several years.

These factors make the current resource tax seem ridiculous: Crude oil prices have risen five to six times from 1993, while the resource tax is still the 1993 tax rate. The coal resources tax is even more ridiculous, and its tax rate has not been adjusted since 1984.

The monopoly enterprises earned enough money, foreign investors laughed, and the government's resource tax revenue did not increase accordingly. In contrast, the parties have made severe criticisms of the current resource tax system. However, with a little analysis, it can be seen that although the dividends obtained by foreign investors are most likely to cause controversy and even passion, this phenomenon is only an incidental result of the unique management structure of the state-owned monopoly companies of resources.

The largest and most important resource companies are basically state-owned monopolies that are regulated by the central government. On the other hand, resource taxes are local taxes, and tax revenue is allocated to local finances. Therefore, the central government naturally tends to set the tax rate at a relatively low level and delays raising the tax rate. Of course, local governments will actively request an increase in resource taxes. In recent years, some provinces with large oil and coal production have proposed that the central government raise the resource tax rate.

The game between the central government and local governments on the issue of resource taxes is not yet known. However, this issue reminds us that we should carefully explore a more reasonable model for the benefits and costs of allocating resources between the central government and local governments and between monopolies and local people.

The current profit-cost allocation pattern is basically that the exploitation of mineral resources can bring huge profits to monopolies. These profits are not turned over, but are at the disposal of the companies themselves. Local governments can only get a small amount of resource taxes and other income. Local people often do not have the legal right to exploit. Shanxi's private small coal mines and private oil fields in northern Shaanxi are largely shut down by the government because their property rights are not guaranteed. On the other hand, the costs associated with the exploitation of mineral resources, such as environmental pollution and ecological imbalances, are entirely borne by the local people. This structure is slightly out of balance. State-owned monopolies have almost no revenue and no responsibility. Local citizens and local governments cannot obtain reasonable returns from their abundant mineral resources.

This is equivalent to an institutional subsidy. What pays for this kind of subsidy is the local people who own mineral resources. It is also this distorted system that has caused the western region to remain in a state of poverty despite its abundant mineral resources. This is not normal anyway.

This kind of system was formed in an era when the planned economy was still relatively strong. At that time, the profits and taxes of the state-owned monopoly enterprises were handed over to the state. Then, at least in theory, the benefits obtained by the central monopoly companies from the resources can be partially shared by the local people. of.

Obviously, the economic landscape has undergone tremendous changes today. PetroChina and Sinopec are obviously not purely state-owned enterprises. It is a commercial enterprise with its own business objectives and has its own independent business interests. The central government is only one of the shareholders. Well, there is of course no reason for local people and local governments not to recover the costs that such companies bring to the locals in the process of obtaining their profits.

If our policy is to transform resource-based central monopolies into independent business enterprises through reforms, then these enterprises should be able to discuss business through the entire process of obtaining the right to extract resources and exploit resources. Not only does the local government have reason to think about this issue, the central government should also think about it. That is to say, those resource exploitation enterprises should be allowed to bear all their costs. The government, especially the central government, has no reason to allow these commercial enterprises to enjoy various institutional subsidies.

It is reasonable to increase the resource tax rate appropriately. However, what is more important is the adjustment of the tax structure. For example, the change of the taxation method will be levied from the current production output to the estimated recoverable reserves, which will encourage enterprises to increase resource extraction rates to reduce the waste of mineral resources.

The government is currently considering reforming the mineral resources exploitation and utilization system, which involves the taxation system and the property rights system of mineral resources. Here, I am afraid that I need to consider more than before, how to let local people share the benefits of resources, and bring resources closer to the people.

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