BEIJING: China’s Parliament passed a law on Sunday that will levy specific environmental protection taxes on industry for the first time from 2018, as part of a renewed focus on fighting the country’s pollution woes.
Anger has risen in the world’s second-largest economy at the government’s repeated failure to tackle land, water and air pollution, with large parts of northern China enveloped in dangerous smog in recent days.
“Tax revenue is an important economic means to promote environmental protection,” the Finance Ministry said in a statement.
The tax rate will be 1.2 yuan ($0.17) per unit of atmospheric pollution, 1.4 yuan per unit of water pollution, 5 yuan per ton of coal waste and 1,000 yuan per ton of “hazardous waste.”
Industrial noise polluters will also be levied 350 yuan per month if they exceed limits by 1-3 decibels, 700 yuan for 4-6 decibels and 11,200 yuan per month for 16 decibels and more.
The law goes into effect on Jan. 1, 2018.
China has not previously imposed any specific environmental taxes and the new levy will replace an earlier system of miscellaneous charges that are regarded as far too low to deter polluters.
Officials have repeatedly stressed that the new policy is not designed to increase the tax burden on enterprises.
“The core purpose (of the policy) is not to increase taxes, but is to improve the system and encourage enterprises to reduce emissions — the more they emit the more they will pay, and the less they emit the less they will pay,” Environment Minister Chen Jining said earlier this year.
The details of the new law have been fiercely contested by the Ministry of Environmental Protection, the Ministry of Finance, the State Taxation Administration and local governments, and has been subject to repeated delays. Conflicts of interest have emerged as other departments worry about lost revenues once the previous system of emission discharge fees is abolished. Some government researchers have also argued that carbon dioxide and other greenhouse gases should be included in the plans.
Jia Kang of the Ministry of Finance’s Institute of Fiscal Science complained this year that the environmental tax proposals were far too conservative, with the tax rate per ton of sulfur dioxide still much cheaper than paying for the equipment required to stop it entering the atmosphere.
He suggested that, in order to avoid increasing the tax burden on firms, other business taxes should be cut and replaced by the environmental tax, which would give authorities a more powerful tool to force a firm to improve its environmental performance.
Last week, China’s crackdown on exhaust-spewing factories that shut or slashed output at sites including steel mills, textile and cement factories and coal-fired power plants sent ripple across major bulk commodity markets.
City and regional governments shut thousands of plants in China’s industrial heartland, from Hebei province that surrounds Beijing to Shandong southeast of the capital, to combat smog that blanketed the country’s north for five days last week.
Many plants reopened, as winds cleared the polluted air. But closures on this scale could put the brakes on China’s better-than-expected output of major commodities, hurt demand for raw materials, like iron ore and coal, clog global supply chains and get business for the world’s second-largest economy off to a subdued start in 2017.
Previous industrial shutdowns at steel mills and petrochemical plants, such as near cities like Hangzhou in Zhejiang province to ensure blue skies before the high-profile G20 summit in September, were made in advance and gave operators time to prepare.
Heavy industry was already feeling the effects of years-long measures by China, the world’s top steel and base metals producer, to shut excess capacity and clean up the bloated, polluting sector.
However, HSBC’s Bloxhom believes China’s ongoing supply-side reform, which has tightened supplies and boosted bulk commodity prices, including coal and iron ore, in recent months, will help support the long-term market.
Anger has risen in the world’s second-largest economy at the government’s repeated failure to tackle land, water and air pollution, with large parts of northern China enveloped in dangerous smog in recent days.
“Tax revenue is an important economic means to promote environmental protection,” the Finance Ministry said in a statement.
The tax rate will be 1.2 yuan ($0.17) per unit of atmospheric pollution, 1.4 yuan per unit of water pollution, 5 yuan per ton of coal waste and 1,000 yuan per ton of “hazardous waste.”
Industrial noise polluters will also be levied 350 yuan per month if they exceed limits by 1-3 decibels, 700 yuan for 4-6 decibels and 11,200 yuan per month for 16 decibels and more.
The law goes into effect on Jan. 1, 2018.
China has not previously imposed any specific environmental taxes and the new levy will replace an earlier system of miscellaneous charges that are regarded as far too low to deter polluters.
Officials have repeatedly stressed that the new policy is not designed to increase the tax burden on enterprises.
“The core purpose (of the policy) is not to increase taxes, but is to improve the system and encourage enterprises to reduce emissions — the more they emit the more they will pay, and the less they emit the less they will pay,” Environment Minister Chen Jining said earlier this year.
The details of the new law have been fiercely contested by the Ministry of Environmental Protection, the Ministry of Finance, the State Taxation Administration and local governments, and has been subject to repeated delays. Conflicts of interest have emerged as other departments worry about lost revenues once the previous system of emission discharge fees is abolished. Some government researchers have also argued that carbon dioxide and other greenhouse gases should be included in the plans.
Jia Kang of the Ministry of Finance’s Institute of Fiscal Science complained this year that the environmental tax proposals were far too conservative, with the tax rate per ton of sulfur dioxide still much cheaper than paying for the equipment required to stop it entering the atmosphere.
He suggested that, in order to avoid increasing the tax burden on firms, other business taxes should be cut and replaced by the environmental tax, which would give authorities a more powerful tool to force a firm to improve its environmental performance.
Last week, China’s crackdown on exhaust-spewing factories that shut or slashed output at sites including steel mills, textile and cement factories and coal-fired power plants sent ripple across major bulk commodity markets.
City and regional governments shut thousands of plants in China’s industrial heartland, from Hebei province that surrounds Beijing to Shandong southeast of the capital, to combat smog that blanketed the country’s north for five days last week.
Many plants reopened, as winds cleared the polluted air. But closures on this scale could put the brakes on China’s better-than-expected output of major commodities, hurt demand for raw materials, like iron ore and coal, clog global supply chains and get business for the world’s second-largest economy off to a subdued start in 2017.
Previous industrial shutdowns at steel mills and petrochemical plants, such as near cities like Hangzhou in Zhejiang province to ensure blue skies before the high-profile G20 summit in September, were made in advance and gave operators time to prepare.
Heavy industry was already feeling the effects of years-long measures by China, the world’s top steel and base metals producer, to shut excess capacity and clean up the bloated, polluting sector.
However, HSBC’s Bloxhom believes China’s ongoing supply-side reform, which has tightened supplies and boosted bulk commodity prices, including coal and iron ore, in recent months, will help support the long-term market.
