Struggling Coal Producers to get Tax Cut
China Securities Journal stated that the government is planning to consider cutting the value added tax of Vat that are paid by coal companies from 17 percent to 13 percent to further support a sector that is stricken by a slow demand. The 17 percent tax was imposed on coal miners in 2009 after a rapid increase in prices and officials were complaining that no corresponding cuts were made to the Vat rate even with a market downturn that started in 2012.
Premier Li Keqiang asked the parliament last month that the country is striving to reduce their dependence on coal, and since its one major source of pollution, they will take certain actions to turn the sector around which has nearly 6 million people employed nationwide. 70 percent of China’s coal enterprises suffered losses as a result of a rapid decline in Prices in the past two years that was paired with a supply glut.
Operating income of large scale coal miners have reached 397 billion for the first two months this year, but down 8.3 percent compared to the same period in 2014. The government tried hard to curb the inflow of cheap imports and to cut down on production but prices still continue to slip down. Coal producers can be squeezed further by decided to trim down tariffs that are paid to coal fired power producers.