Environmental tax law brings legal support to pollution fight: official
The new tax replaces the "pollutant discharge fee" which authorities had been collecting for nearly 40 years.
Professor Lan Hong with Renmin Univerity says the new rules bring more standardized legal support for the fight against pollution.
"The new environment tax system is more serious and intensive in execution. Previously, companies that refused to pay their pollutant discharge fees only received a minor administrative punishment. Now if enterprises fail to pay taxes, it means they are violating the law, which is a much more serious situation," said Lan.
China had been collecting a pollutant discharge fee since 1979.
However, some local governments exploited loopholes and exempted companies that were big contributors to their fiscal revenues.
For years, regulators have been suggesting replacing the fee system with tighter restrictions.
The newly released tax is part of a broader plan to create a green financial and taxation system to promote pollution control.
Bie Tao is an official with the Ministry of Environment Protection.
"Under the new system, the amount of tax is determined at the provincial level but still needs to be reported to the central government. The principle is that companies with high pollutant discharges will pay more; low discharging enterprises pay less. Pollutant discharges below half of the standard amount means taxes will also be cut in half. Discharges below 70 percent of the standard amount will see the tax cut by 25 percent," said Bie.
The Environmental Protection Tax targets companies and public institutions that discharge pollutants directly into the environment.
Companies will also have to pay for producing noise, air and water pollutants, as well as solid waste.
Chang Jiwen with China's Development Research Center at the State Council says the new tax system should help the structural adjustment of certain industries.
"After the implementation, the economy will definitely be impacted, especially for some contamination generating industries. Air, water and solid waste related companies will need to be careful. Even though the tax amount will be similar to the previous pollutant discharge fees, it's expected to increase in the future. This will force some companies to upgrade their facilities to environmentally friendly ones. Companies that fail to adapt to the difference might end up being forced to shut down," said Chang.
The tax money collected will be allocated to the local governments' budgets for pollution control.
Beijing, Tianjin, Hebei, Shanghai, among other regions, have the highest taxes, while Xinjinag, Liaoning and Jilin have the lowest.
The Central Economic Work Conference last month listed tackling pollution as one of the three tough battles that China aims to win in the next three years.