China starts collecting environment protection tax
China starts collecting environment protection tax
Author: Matej Balen
2nd January 2018
BEIJING - As of yesterday, China began collecting an environment protection tax, since the country's Environmental Protection Tax Law took effect on January 1, 2018. The tax is expected to be more effective substitute for the "pollutant discharge fee" which China had been collecting for nearly 40 years.

China is definitely taking more active measures in environmental protection ever since it joined the international fight against climate changes by joining the Paris Agreement. China’s previous "pollutant discharge fee" was in effect since 1979, however, many local governments exploited loopholes and protected enterprises that were heavy pollutants, but also big contributors to local fiscal revenue.

In October 2017, in his speech during the 19th Party Congress, President Xi Jinping signalled that officials should take environmental issues seriously: “The damage that humanity does to nature will ultimately harm humanity itself – this is unavoidable”, he said.

And since then a major campaign against environmental violations has started, that have penalized more than 30,000 companies and over 5,700 officials so far. Central government inspection teams in coordination with multiple local government agencies have regularly been doing inspection sweeps in all provinces and regions. Pollution has been recognized as one of the “three tough battles” that the Chinese government aims to win in the next three years, according to president Xi.

Furthermore, the new environment protection tax has been made to eliminate previous legal loopholes and to show that a new paradigm in environmental enforcement in China is in place, backed by policymakers from the highest level. The Environmental Protection Tax Law targets companies and public institutions that directly discharge listed pollutants. Under the new law, companies will pay taxes for producing noise, air and water pollutants as well as solid waste.

The new tax law sets rates of CNY1.2 ($0.17) per unit of air pollution, CNY1.4 per unit of water pollution, CNY5 per tonne of coal waste, and CNY5-CNY1,000 for each tonne of solid ‘hazardous’ waste. For example, polluters will pay CNY1.2 for emitting 0.95kg of sulphur dioxide and CNY1.4 for 1kg of chemical oxygen demand (COD). In addition, industrial noise polluters will pay three levels of taxes ranging from CNY350 to CNY11,200 per month, according to their decibel level.

This is China's first tax designed for environmental protection, which will help establish a “green" financial and taxation system to promote pollution control and treatment of pollutants, said Wang Jinnan, head of the Chinese Academy for Environmental Planning under the Ministry of Environmental Protection.

 

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