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China to levy a tax on carbon emissions

Date
22 February 2013
China to levy a tax on carbon emissions

BEIJING: China’s Finance Ministry has announced a new set of green taxation policies, including a tax on carbon which will help curb emissions, improve air quality and incentivize the clean energy industry in China.

The Ministry may also propose taxing energy intensive products and luxury goods, as well as other natural resources such as water.

The new taxation measures are most likely an effort to control coal use, as China's coal consumption almost matches that of the rest of the world combined. Last month’s record pollution levels in China’s big cities is also spurring governments into action on adopting low carbon policies.

Jia Chen, Head of the Ministry's tax policy division stated on the Finance Ministry website that local rather than national taxation authorities will collect the levies. On the website, Jia Chen said: "[We will] continue to improve and implement tax policy to support energy conservation, environmental protection and comprehensive utilization of resources. [...] To push forward the reform of resource tax, the taxable way of the coal resource tax levied ad valorem, and an appropriate increase in the level of tax burden from the amount levied changed, and other mineral resources, raise the tax from the taxable amount, and timely water resources into the resource tax levy .To actively promote environmental tax reform, the existing sewage charges to the environmental protection tax, and carbon dioxide emissions into the scope of the collection, and collecting authorities changed by the environmental protection department of the local tax authorities." 

As yet, no details have been shared of when the new taxes will come into action.

Changhua Wu, Greater China Director, The Climate Group said: "Deploying effective policy instrument to drive transformation has become a major task for Chinese decision makers, more so today than ever. Taxation, carbon trading and pricing have all been recognized as useful market instruments. 

"China is willing and is making efforts to try out what would work most effectively, and The Climate Group in China is working with key stakeholders to provide the needed support to achieve this."

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By Clare Saxon

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