China will soon push forward with a plan to change the levy of coal resource tax to value based instead of by volume, the country''s tax bureau chief said on the sidelines of China''s parliamentary sessions.

It is the right time to carry out reform on resource tax; the present low level of prices will have a much less impact on downstream sectors, Wang Jun, director of the State Taxation Administration, told reporters on March 10.

“Low rates of inflation would make it easier to include coal within the scope of China''s resource tax reforms,” he said, adding it will be good for resource and energy-saving and the country’s fight with pollution.

The new coal tax, when implemented, is set to increase costs for miners such as Shenhua Energy and China Coal, potentially denting their earnings.

Under a draft proposal submitted to the State Council, the new coal tariff will be set at 2-10% of sales value, compared to the present 2-8 yuan/t based on production volumes.

Coal producers are already struggling with weak prices and demand, and they may be unable to pass on the additional costs to consumers in an oversupplied market.

Sluggish demand has already sparked a local price war after top local producer Shenhua slashed monthly booking prices to boost sales and protect its market share.

On March 10, the Fenwei/Platts CCI1 index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed at 524 yuan/t inclusive of VAT, FOB basis, down 11 yuan/t week on week and 98 yuan/t from the beginning of the year.