China mulls new tax for environmental protection

Updated: 2011-10-24 21:03


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BEIJING - The introduction of a comprehensive environmental tax policy has been under discussion for years in China. The policy may soon come to light, as China's cabinet recently said that the country will look into the possibility of imposing such a policy.

In a guideline issued last week regarding China's environmental protection efforts, the State Council said the country will "actively promote reforms in environment-related taxes" and "conduct research regarding the collection of an environmental tax."

The move suggests that the debut of a "green tax" is now officially on the government's agenda and that reforms will make substantial progress during the country's 12th Five-Year Plan period (2011-2015), analysts said.

A step forward

Environmental taxes are broadly defined as a series of tax policies created for the purpose of promoting environmental protection. The taxes are typically designed to include the social costs of any negative impact on the environment in the production and purchase costs of goods.

In Western countries, environmental taxes mainly target sulfur dioxide emissions, water pollution, noise pollution, solid waste and garbage.

"There is not yet a specific environmental tax in China. However, if all environment-related taxes are counted under that category, we do have some items, such as the resource tax and consumption tax," said Zhang Peisen, a researcher with the State Administration of Taxation.

Zhang said the creation of a new environmental tax will be rather complicated, as it will have to take into account the relationships that already exist between the country's existing taxes.

Calls for the debut of an environmental tax have grown considerably in recent years, as China's breakneck development has taken a heavy toll on its resources and environment.

"The stress on environmental tax reforms in the guideline comes as China faces a grim situation in meeting its emission control target," said Bai Jingming, an official from the Ministry of Finance (MOF).

In a blueprint of China's energy-saving programs, China says it aims to cut energy consumption per 10,000 yuan (about $1,570) of gross domestic product (GDP) by 16 percent by 2015, saving 670 million metric tons of coal equivalents by that time.

Statistics from the Ministry of Environmental Protection have shown disappointing performance for the first half of this year. Emissions of nitric oxide, a major pollutant, rose 6.17 percent year-on-year.

Experts said the creation of an environmental tax will be a step forward in regulating the use of resources and energy, which will be conducive to the country's efforts to protect the environment.

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