Coal miners given reprieve as tax reform proposal is put on hold

Beijing has put on hold for at least three months a long-expected tax reform for coal mining firms that will result in a higher levy, amid worries of rising inflation, state media reported.

The State Council, the central government's cabinet, had not approved a proposal submitted recently by mainland finance and taxation authorities, the Shanghai Securities News said yesterday without citing any source of the information.

'This does not mean the tax increase and reform will not be put into practice, it's just being delayed,' it quoted an unnamed source.

On Friday, the National Business Daily reported that Beijing would launch the tax overhaul and increase over the weekend.

Under the tax reform, first proposed in 2006, the basis for computing the resource tax would be changed to value from volume, effectively boosting the government's coffers as domestic coal prices have risen about fivefold in the past six years.

Miners now pay a tax of 2.50 yuan (HK$2.84) to 3.50 yuan per tonne, or about 1 per cent of their revenue.

Sun Yaohai, director of the National People's Congress' Regulation Office of Environmental and Resources Protection Commission, was quoted by China Business News in November as saying Beijing wanted to lift that to 3 per cent of revenue.