Feb. 11 – China could raise the oil-price threshold for firms qualified for windfall taxes, from US$40 a barrel to US$60 along with granting more subsidies to aid the petroleum and chemical industry.

In 2008, oil firm CNPC paid a staggering RMB85 billion in windfall taxes or an estimated 62.42 percent of its profit to the Chinese government.

The windfall tax applies to oil produced in the country and sold at more that US$40 a barrel with a rate determined on a sliding scale of 20 to 40 percent.

The China Business News reported that there is also the possibility of relief proposals that could include subsidies to CNPC and Sinopec Group, to make up losses incurred last year from high crude oil costs and lower fuel prices mandated by the state.

It has not been confirmed whether tax and subsidy proposals would be part of  the official version of the stimulus plan for the sector to be submitted to the State Council. The stimulus plan might also provide a RMB100 billion fund injection to the industry to improve the quality of oil products plus another RMB400 billion for more petrochemical projects.