Fuel Tax May Add To Woes Of Bus Services

Shanghai, December 5, 2008: (Gasgoo.com) China will soon levy a fuel tax on vehicles, and will cut fuel prices at the same time the tax comes into force to reduce motorists' costs, local media said yesterday. But some people are concerned that this fuel tax will add to the woes of the passenger vehicle sector, especially the bus services in public transportation.

The bus service in China will face further miseries brough by the imminent fuel tax, said an industry expert. Though highway networks are expanding nationwide, the train speed hike and plane ticket price cuts have posed huge challenges to long-distance bus transportation, which sees no advantage over trains and planes in speed and price. If the fuel tax is levied on bus services, their profit margin will be narrowed to zero.

Long distance passengers would choose the cheap and fast means of transportation. Given the similar price for the same distance, the train is now much faster than the bus. And the air fare now is much lower than before. More and more long-distance passengers are turning to train stations and airports for their journey.

Although the urban public transportation is the main source of revenue of bus services, the local governments are putting more money into rapid transit construction. In many cities, the surface transportation infrastructure is not much improved and traffic bottlenecks still exist. The traffic congestion often causes waste of fuel.

The coming fuel reform will scrap the road tolls and other small fees, but fuel tax will be much larger than all these together. If the fuel price doesn't fall, the overall fees or costs of bus services will not drop.

Some possible solutions to these problems should be found to meet the challenges. Government subsidies and fuel-efficient buses may help ease the miseries of long-distance bus services somewhat.

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