Local media reported that the related departments are considering the policy to enlarge valuation taxation levy base of resources, and rare earth may be included.

Valuation taxation is levied on the sold price of products."If rare earth be levied, the tax will increase. And this policy is aming to strengthen the rare earth protection," an expert was quoted in local media.

According to provisional regulations on resource tax of People's Republic of China revised in 2011, rare earth is now levied with the tax of 0.4 to 60 yuan per ton. Light rare earth is levied with 60 yuan per ton since April 1st 2011. Valuation taxation on oil and gas resources has been levied since November last year.

According to local media, Xie Xuren, the finance minister mentioned to enlarge valuation taxation on resources. Su Bo, the vice minister of Industry and Information Technology also mentioned to protect resources by adjustment of tax.

"Tax will account for 40 percent of rare earth exploitation cost, and 50 percent of the cost will be resource tax," said Luo Renyuan, an analyst from Industrial Securities.

But the resource tax reform may bring more fiscal revenue to local governments. Figures from the Ministry of Finance show that resources tax rose by 68.3 percent in H1 this year compared to the same period of last year.