A new unified environmental tax is possible but legislators remain divided over how to introduce it.
Although the idea of reforming the system by which polluters are taxed was first proposed two years ago, it was fast-tracked in May, along with changes to resource and property tax, by the National Development and Reform Commission in its state-council-approved plan for deepening economic reforms.
Expert opinions based on research conducted into the proposed tax have started to flow through to China’s Ministry of Finance (MOF) and Ministry of Environmental Protection (MOEP).
But departments disagree on whether the new tax should be introduced as simply an addition to existing excise tax legislation (which would be quick) or as an independent piece of legislation, a move which would require scrutiny and approval from the country’s top legislative body, the National People’s Congress (NPC) and would therefore take some time.
China began imposing charges on the emissions produced by polluting companies in 1982. At present, revenue from these fees amounts to approximately RMB20 billion nationwide each year. However, local environmental protection agencies are responsible for collecting the fees and there is considerable dissatisfaction at the way in which this is done.
EEO.CO reports that if an independent environment tax was created, revenues would flow directly into local treasury coffers. However, if the environment tax was introduced as an additional form of excise tax, the central government would retain control of revenue collection and would later transfer a proportion of the funds to local governments.