环境保护部环境规划院 Policy Design of Environmental Tax in China Ge Chazhong Chinese Academy for Environmental Planning Nov 5, 2010 Bangkok

环境保护部环境规划院

Policy Design of Environmental Tax in China

Ge Chazhong

Chinese Academy for Environmental Planning

Nov 5, 2010 Bangkok


Outline

• General Thinking on Environmental Tax• Overall progress of environmental tax in

China• Framework of Environmental Tax Policy• Design of Environmental Tax Options• Relationship between Environmental Tax and

Pollution Levy• Implementation Strategy


General Thinking on Environmental Tax

Broad sense(3E)Establishing environmental tax;Establishing fiscal and preferential policies;Eliminating subsidies and environmental

charge policies which are harmful for environmental protection.

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Narrow sensecollect or cut taxes from whom engages in

developing, protecting or utilizing environmental resources.

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Plays the role of:Raise fiscal revenue for governments; Be used as special-purpose fund for

environmental protection; Change the polluter’s behaviors.

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The Progress of Environmental Tax in China

• First, starting to learn international experience

• Then, conducting studies on environmental taxes

• Last, policy design– “the Environmental Tax Policy and Its

Implementation Strategy ”

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The Progress of Environmental Tax in China

A long time workRelationship with other tax categories should

be cleared up;Detailed investigation should be carried out;special training should be developed for tax

authority staff.


Framework of Environmental Tax Policy

Independent environmental tax plan; Integrated environmental tax plan;Environmental tax expenditure plan.

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Framework of Environmental Tax Policy in China

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Design of Environmental Tax Options

• Independent environmental tax plan

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Independent Environmental Tax Plan--General Environmental Tax

• Based on the income with goal of collecting money for environmental protection;

• levy taxes on beneficiaries according to beneficiaries pay principle.

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Independent Environmental Tax Plan--General Environmental Tax

Taxpayer All impersonal entities or individuals who pay value added tax, consumption tax and sales tax are taxpayers

Tax base based on the quantity of being paid for three taxes by taxpayer.

Tax rate be 1%~4% of that of three taxes.

Regulation of tax concession

Tax concession is not allowed in environmental tax.

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Independent Environmental Tax Plan--Direct Pollution Tax

• Based on the quantity of pollutants’ discharge;

• Accordant with the theoretical principle of environmental tax.

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Independent Environmental Tax Plan--Direct Pollution Tax--Sulfur Dioxide

TaxObject of taxation

The behavior of sulfur dioxide emission.

Taxpayer polluters who discharge sulfur dioxide into atmosphere, including industrial enterprises, institutions, business companies, service companies and other units.

Tax base based on the real emission quantity of sulfur dioxide.

Tax rate The tax rate of sulfur dioxide of coal is listed in table 1(with reference to study on how to make environmental tax policy in Beijing by CRAES)

Collection Local taxation departments 14


Independent Environmental Tax Plan--Direct Pollution Tax-- Nitrogen

Oxides TaxTaxpayer end users of coal-fired boiler and owners

of motor vehicles.

Tax base based on the real emission quantity of nitrogen oxides.

Tax rate 1200 RMB / ton according to the sulfur dioxide tax rate and the charging standards for nitrogen oxides emissions established by CRAES in 1997.

Collection Local taxation departments15


Independent Environmental Tax Plan--Direct Pollution Tax-- Environmental

Tax of Water Resourcecan be determined according to the scarcity

of water resources and the cost for water pollution control.

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Independent Environmental Tax Plan--Direct Pollution Tax-- Environmental

Tax of Water ResourceObject of taxation

Water used as raw material or for living purpose.

Taxpayer enterprises, institution and individuals who use water resources

Tax base the quantity of water consumed, or the real quantity of water supply

Tax rate 20%~30% of the water rate temporarily, which will changed to be differential tax rate according to the scarcity of water resources and water pollution conditions.

Collection State taxation departments17


Independent Environmental Tax Plan--Direct Pollution Tax-- Polluting

Products Tax

• Stimulate consumers to reduce the quantity of consumption of products with potential pollution;

• Encourage consumers to select products with no pollution or less pollution.

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Independent Environmental Tax Plan--Direct Pollution Tax-- Polluting

Products TaxObject of taxation

All kinds of products or consumer goods which can cause environmental pollution, including chemical fertilizer, pesticide, phosphoric detergent, disposable woody tableware, battery with mercury and chrome etc.

Taxpayer Consumers or users of the above-mentioned products

Tax base The quantity of consumption and value of pollution products

Tax rate implement differential rate by 1%~3%.

Collection State taxation departments 19


Design of Environmental Tax Options

Integrated Environmental Tax Plan which is functioning by reform and improvement of current tax categories, cooperate with environmental charge system as well.

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Integrated Environmental Tax-Consumption Tax

To Add new tax items: products with heavy pollution and large resource consumption are added, such as phosphate detergent, batteries containing mercury and cadmium, disposable tableware and plastic bags etc.

To Implement differential tax rate for tax items of carbon and clean energy.

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Integrated Environmental Tax-Consumption Tax

The

adjust

ment of

tax rate

To increase consumption tax rate of gasoline and diesel oil, meanwhile considering the environmental cost.For cars with the same exhaust volume, differential treatments should be carried out according to whether if purifier to tail gas is installed. The tax rate of clean vehicles is at the low differential tax rate or exempted.

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Integrated Environmental Tax- Resource Tax

to adjust grading income and to promote rational exploitation and utilization of natural resources;

has little effect on resources saving and protecting the eco-environment.

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Integrated Environmental Tax- Resource Tax

New tax

items

Tax item of freshwater resources includes the development and utilization of ground water and surface water. Tax item of forest resources.Tax item of grassland resources is added to levy tax on grassland development and utilization.

The adjustment of tax rate

Government should adjust tax rates of natural resources according to the scarcity of those resources and costs of ecological compensation.

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Integrated Environmental Tax-Enterprises Income Tax

Some preferential tax policies should be stated and given;

The scope of preferential policies should be limited;

Environmental protection administrations should play the leading role in identifying the qualification of applying those preferential policies.

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Integrated Environmental Tax-Other Relevant Taxes

City maintenan

ce constructi

on tax

New tax item

City maintenance construction tax will be levied upon in countrysides.

The adjustmen

t of tax rate

Increase tax rate for environmental protection need only.

Farmland use tax

New tax item

Be levied upon wetland use. Un-agriculture land in countryside is also listed under the scope of farmland use tax.

The adjustmen

t of tax rate

Increase tax rate of farmland use tax to a larger extent; the tax rate of wetland use tax is high and the tax rate of un-agriculture land is low.

Vehicle and vessel usage tax

The adjustmen

t of tax rate

Increase tax rate; and to determine different tax rates according to the quantity of exhaust volume.

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Integrated Environmental Tax-Environmental Tax Expenditure Policy

The government can regulate some preferential treatments in tax system;

Corresponding environmental tax expenditure policies should be established or supplemented on time;

Preferential means should be enriched.

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Integrated Environmental Tax-Environmental Tax Expenditure Policy

Improving measures:To clarify the policy coverage to strengthen its

pertinence;To adjust means and forms of preferential tax

policy;To determine the preferential degree of

environmental tax expenditure policy;To establish comprehensive preferential policies.

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Environmental Tax and Charge • Both have the same function mechanism;• Some problems occurred in the process of

implementation of environmental charge;• The combined function will provide stronger

stimulation;• The environmental charge and environmental tax

will coexist for a long time in China;• Several important items in environmental charge

could be transformed into tax.

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Implementation Strategy

STEP-STEP APPROACH: Easy first hard later, old first new later, integrated first independent later

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To eliminate subsidies and preferential tax policies harmful to environmental protection;

To give a comprehensive consideration on environmental tax and environmental charge;

To carry out integrated environmental tax plan;To introduce independent environmental tax.



Piloting Program AheadPolluting products tax;Coal consumption tax;Taking water resource into resource tax.

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Other work to do:To resolve technical issues;To specify the management structure;To arouse the public awareness of

environmental tax;To strengthen the fundamental work of

environmental tax;To carry out further study on environmental tax.

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Thank you!http://www.caep.org.cn

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Documents

环境保护部环境规划院 Policy Design of Environmental Tax in China Ge Chazhong Chinese Academy for Environmental Planning Nov 5, 2010 Bangkok