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China has raised a tax paid by coal producers in four provinces starting from the beginning of this month, according to the State Administration of Taxation.

Each province will pay a different tax level, with the charge increasing from 1-1.9 yuan (12 to 23 US cents) a ton.

There has also been a call to change the way the tax is levied to improve the extraction rate at mines.

The new tax will not have a great impact on coal producers in the four provinces as the increase is not huge, said Wang Ye, a researcher with CITIC Securities.

"It will not lead to a big increase in the price of coal," he added.

The government ordered an increase in the tax to 3.2 yuan (40 US cents) a ton for coal producers in Shaanxi and to 2.5 yuan (31 US cents) a ton in Jiangsu.

The tax went up to 2.5 yuan (31 US cents) a ton in Jiangxi and to 2.3 yuan (28 US cents) a ton in Heilongjiang.

It is the second time the government has increased the tax in Shaanxi Province.

The tax authority ordered similar increases in many other provinces about a year ago.

Currently, domestic coal producers only pay tax on the amount of coal they extract. But some industry experts suggest the rate should be based on a mine's whole reserves.

This would encourage mine owners to extract poorer quality coal that might be more costly to extract and so cut down on waste.

The rate of extraction for China's state-owned coal producers is around 45 percent, but this falls to only 15 to 20 percent at smaller miners, far below the global level, industry figures show.

As the world's biggest coal producer and consumer, China is now dependent on the fuel for more than two-thirds of its energy consumption.

(China Daily April 7, 2006)