China will extend an experimental tax on oil and gas to the entire nation, taxing the resources between 5% and 10%, the State Council said Monday.

China introduced a 5% resource tax last year in oil-rich but ethnically troubled Xinjiang Uighur Autonomous Region, calculated on value rather than production volume, later extending it to 12 western provinces and regions.

The move marks a new step in China 's drive to become a cleaner, more efficient growth model, less dependent on resource-intensive industry.

The choice to levy the new taxes also signals less concern about inflation. Up to now, Beijing has chosen to move slowly on the long-planned reform, as the new taxes will increase costs for businesses and could worsen inflation pressures.

The tax will be extended nationwide starting Nov. 1, the State Council said in a statement.

The two resources were previously taxed based on volume of output, not total value. Oil was taxed at CNY8-30 a ton and natural gas at CNY2-15 per thousand cubic meters.

Moody's investors service earlier estimated that the national extension of the taxes would cost the nation's three major state-owned oil companies around CNY44 billion (US$6.87 billion) combined per year.

The State Council will gradually apply the reform to other resources, it said in a statement, without giving further details.

The taxes go to the provincial governments where the resources are extracted, before they are refined or processed into other products. This helps funnel cash to financially-strapped local governments.

China will also levy a higher tax on rare earth ores, at CNY0.4-CNY60 per ton, the council said. The ores were previously taxed at CNY0.4-CNY3.0 per ton, depending on the type of rare earth.

Taxes on ferrous and non-ferrous metals will remain unchanged at their previous levels.

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