Shimmering New Green Tax
The enactment of the environmental protection tax law motivates enterprises to fulfill their social responsibility, enhances the efficiency of environmental governance and helps build a beautiful China.
On January 1, 2018, China’s first environmental protection tax law went into effect. According to it, the tax is calculated monthly and declared and paid quarterly. So, in April, the tax will be collected for the first time.
The environmental protection tax law is an institutional guarantee to improve China’s ecology. With maturing institutions and progressing structural reform, the philosophy of green development has been integrated into Chinese people’s lives and production, promoting the country’s ecological civilization to new heights.
The law targets enterprises and other entities that directly emit a taxable pollutant, including air and water pollutants, solid waste and noise—the four main sources of the pollution.
Meanwhile, according to the harm on the environment of different pollutants, the law sets different tax standards to impose higher levies on worse polluters. For example, discharging formaldehyde requires paying a tax 24 times higher than emitting the same amount of smoke and dust.
The law also uses tax breaks to encourage three healthier practices: clean production, centralized processing and cyclic utilization. For example, if a company discharges taxable air and water pollutants with densities lower than the standards regulated by the state or local governments, the entity can get a partial tax break. And legal entities responsible for centralized processing of water and household waste are exempt from taxes.
“The law adopts a two-way mechanism by granting tax reductions or exemptions to eco-friendly enterprises and imposing punishments on those violating emission standards,” explains Dong Zhanfeng, vice director of the Department for Environmental Policy at the Chinese Academy for Environmental Planning. “This encourages enterprises to cut emissions and pushes energy-intensive and heavily polluting industries to upgrade and transform, which will promote the country’s adjustment of its economic structure and development mode.” Dong believes that these measures will effectively promote environmental protection through tax leverage.
The environmental protection tax replaced a “pollutant discharge fee” that had been collected since 1979. Polluting enterprises paid the fee, and revenues were designated for environmental improvement.
The introduction of a pollutant discharge fee played an important role in pollution control. But the regulation did not have a strong legal foundation as the new environmental protection tax law does. Because some local governments and authorities interfered, the discharge fee was often implemented in a way that hardly encouraged polluters to change their ways.
“According to the environmental protection tax law, the tax is paid in terms of the quantity of emissions,” elaborates Dong. “The more you discharge, the more you pay. It is using economic methods to pressure polluting firms to upgrade their technologies and
In Wuyi County, Zhejiang Province, the inspection team for environmental protection checks a water sample from the drain outlet of an enterprise. VCG