Beijing : A trial tax is to be imposed on oil and gas production in China's northwest Xinjiang region.The five per cent levy which, if successful, could be imposed nationwide, is hoped to increase wealth the region and may ease public anger at the wealth of government energy companies.
The tax will be imposed on Xinjiang, a northwestern Muslim area, on Tuesday. It's part of a development plan for the desert region, where ethnic tensions exploded into rioting last July and resulted in the deaths of nearly 200 people. Minority areas such as Xinjiang and Tibet are among China's poorest, despite producing a large share of its oil, gas and minerals. A key source of anti-Chinese anger is the belief by local residents that they get little of the wealth extracted by government companies, most of which flows to distant Beijing. "The increased revenue from the resource tax should be focused on improving local people's lives," said President Hu Jintao at a May 17-19 conference on how to defuse tensions in Xinjiang.
However there's been no word on how the tax might apply to other resources such as copper and gold mining in mineral-rich Tibet. Beijing has invested billions of dollars in Xinjiang and other minority areas and built roads and other infrastructure. But local residents say the benefits largely go to settlers from China's Han majority.
The new tax would cut into profits at state-owned oil and gas companies, possibly helping to defuse public irritation at the windfall they've enjoyed due to soaring prices and China's boom in auto sales. The biggest oil producer, PetroChina, reported a 2009 profit of $15.1 billion (Dh55.45 billion), or nearly $2 million (Dh7.7 million) per hour. Critics say energy companies and their well-paid bosses benefit from official favours and profit unfairly at the expense of China's public.
"Beijing is, in some way, answering the simmering populism shaped by the perception of nouveau riche oil executives and coal mine bosses who have bought their way into political power," said Damien Ma, an analyst for Eurasia Group in Washington, this week.
