Recently, the Ministry of Finance, the Ministry of Environmental Protection, and the State Administration of Taxation jointly issued a notice requesting all localities to fully prepare for the implementation of the environmental protection tax law, which means that the environmental protection tax collection and management preparation work has been fully launched.

The Environmental Protection Tax Law of the People's Republic of China was deliberated and adopted at the twenty-fifth meeting of the Standing Committee of the 12th National People's Congress in December last year and will be officially implemented on January 1, 2018. This is the first one-line tax law in China that specifically reflects the “green tax system” and promotes the construction of ecological civilization. In the long run, the environmental protection tax must have great significance for environmental governance, but in the future it is necessary to gradually increase the tax rate.

Environmental protection "fee" changed to "tax"

The general idea of ​​the environmental protection tax law is to change the “tax” from “fee”, that is, to achieve a smooth transfer of the sewage charge system to the environmental tax system in accordance with the principle of “transfer of tax burden”. The introduction of the Environmental Protection Tax Law means that the traditional sewage charging system will withdraw from the historical stage after nearly 39 years of implementation.

The sewage charge system is one of the first three environmental policies formulated and implemented in China. In 1979, the Environmental Protection Law of the People's Republic of China (Trial) officially established the sewage charge system, and the Regulations on the Administration of Collection and Use of Sewage Charges promulgated by the State Council in 2003. Provisions are made for the collection and use management of sewage charges. The sewage charge system has played an important role in preventing and controlling environmental pollution, but there are problems such as low collection standards, insufficient law enforcement rigidity, and administrative intervention.

The environmental protection tax law is linked to the current sewage charge system in terms of taxpayers and objects of collection. The environmental protection tax law clearly stipulates that taxpayers are enterprises and institutions and other producers and operators who directly discharge taxable pollutants to the environment. The tax items of environmental protection tax are set according to the current sewage charges, including atmospheric pollutants, water pollutants, solid wastes and noise. The taxation basis also follows the sewage charge billing method, and the pollution equivalent amount is converted according to the pollutant discharge amount. The taxation standard for environmental protection tax is based on the current sewage charge standard as the lower limit of the environmental tax, and the upper limit is increased: the air pollutant tax is 1.2-12 yuan per pollution equivalent; the water pollutant tax is 1.4-14 yuan per pollution equivalent. Solid wastes are classified into different types, and the tax amount is 5-1000 yuan per ton; the noise is based on the number of decibels exceeding the standard, and the tax amount is 350-11200 yuan per month.

In terms of the incentive mechanism, the environmental protection tax has been improved on the basis of the current sewage charge system. The current sewage charge system has only one emission reduction tax exemption: if the taxpayer discharges the concentration of taxable atmospheric pollutants or water pollutants below the specified standard by 50%, the environmental tax will be halved. The environmental protection tax has added a tax reduction: taxpayers discharge taxable atmospheric pollutants or water pollutants with a concentration value lower than 30% of the prescribed standard, and reduce the environmental protection tax by 75 percent.

With the conversion of the two systems of fees and taxes, how to coordinate the two departments directly involved in taxation and environmental protection is the focus of the outside world. In the sewage charge system, the sewage charges are “self-supported by the environmental protection department”, while the environmental tax collection department is changed to the tax authority, and the environmental protection department cooperates with the monitoring and management of pollutants. The Environmental Protection Tax Law stipulates that the environmental protection department and the taxation authority shall establish a tax-related information sharing platform and a work coordination mechanism.

"Environmental protection tax as a new type of tax, based on pollution emissions as a basis for taxation, professionalism, supervision and testing difficulties, lack of experience in collection and management, the traditional means is difficult to meet the needs of collection and management." The responsible person of the Department of Property and Behavior Tax of the State Administration of Taxation Introduction, environmental protection tax from the collection and management preparation to the implementation of the collection, all need the local financial, environmental protection, taxation departments to work closely to achieve information sharing, strengthen the management and mutual assistance.

The joint notice issued by the three departments clarified the preparations for the local environmental protection tax before the levy of the environmental protection tax. It is required to strengthen the organization and leadership, establish a multi-sectoral collaborative working mechanism under the leadership of the local people's government, and form a division and work. Grasp the good situation of co-management and ensure that the environmental protection tax levy work starts smoothly and smoothly.

The notice also requires all localities to implement the tax law authorization, determine the specific applicable tax amount of taxable air pollutants and water pollutants in the region, and the sampling and calculation method for the taxable pollutant discharge. Environmental protection departments and taxation departments at all levels should timely transfer archives and materials to realize tax exchange and sharing of tax-related information between taxation and environmental protection departments. The taxation department should comprehensively understand the tax sources in the region, grasp the tax source base, and promptly establish a basic tax source database.

Environmental protection cannot stop at environmental taxes

The introduction of the environmental protection tax law shows that the Chinese government hopes to use more means to solve market problems by means of docking market mechanisms, and it is also an innovation in institutional mechanisms.

Jia Kang, former chief of the Institute of Fiscal Science of the Ministry of Finance and chief economist of Huaxia New Supply Economics Research Institute, pointed out that the introduction of the Environmental Protection Tax Law has greatly improved the legal status of environmental taxes and fees in China. The sewage charges supported by the regulations have a higher level of legal effectiveness, and the principle of “polluter pays” is determined in the form of law. Moreover, the taxation department, not only the environmental protection department, will increase the intensity of collection, improve the standardization and transparency of environmental tax collection, and facilitate the release of emission reduction signals to emission companies in accordance with the mechanism design intention, and promote green development.

However, Jia Kang believes that the current environmental protection tax law design is still conservative, because subject to various subjective and objective conditions, it only merely shifts the burden of the original sewage charges, and the reform efforts are still insufficient. One of the reasons for the “sickness” of the original sewage charge system is that the collection standard is low, even lower than the pollution control cost of the emission enterprises. As a result, the emission companies prefer to pay sewage charges and are not willing to control pollution.

Luo Jianhua, secretary-general of the Chamber of Commerce of the National Federation of Industry and Commerce, also believes that the current environmental tax law is not much different from the original sewage charges in terms of taxation. The fee-for-tax reform may not show a significant effect in the short term, "but in the long run." Look, the environmental tax is definitely very important for environmental governance. I think that the tax rate should be gradually increased in the future. Now many private enterprises are not willing to curb pollution. Improving the environmental tax rate can promote governance, but it will increase the cost of enterprises. This is a need. The problem of balance."

Xue Tao, executive director of the E20 Research Institute and deputy director of the E20 Joint Research Institute of the Peking University School of Environment, said that the environmental tax is actually a process of monetizing environmental pollution. Economic production, especially the negative externalities of environmental pollution emissions in industrial production, has previously been an external phenomenon that has nothing to do with the economic benefits of enterprises. Monetization converts the external costs of environmental pollution into internal costs of enterprises, and uses economic benefits as a guiding principle. The means of regulation make environmental protection a conscious act of the enterprise, and it has great significance for environmental protection in the long run. In addition, Xue Tao believes that another role of the environmental protection tax is to increase the government's tax revenue. “The environmental protection tax is a very healthy source of taxation. It is not to increase the burden on enterprises, but to promote the transformation of enterprises, encourage enterprises to reduce pollution, and pay more attention to environmental protection. This is also a way to maintain sustainable development."

Xue Tao believes that in the long run, in addition to the environmental protection tax law, China's environmental protection industry needs to continue to develop in many aspects. The first is environmental monitoring, because the tax is based on the pollutant monitoring data of the relevant subject. In recent years, industry chaos that “monitoring equipment is not operating and monitoring data fraud” has occurred. How to comprehensively monitor and improve the accuracy of testing data is a problem that needs to be solved in the implementation of the environmental tax law, and also the basis of environmental governance.

Secondly, the emissions trading is the same as the environmental tax. It is also a market-based economic system arrangement that transforms the emission rights from the administrative transactions of the government and enterprises into market economic transactions between enterprises. China has been piloting emissions trading rights for nearly a decade since 2007 and still has not landed.

Finally, the development of environmental public service charges, such as the previous garbage disposal charges. Xue Tao believes that the cost of some environmental protection-related public services needs residents to bear part of it. “The taxpayers of this environmental tax law only include enterprises. Although the biggest source of pollution in China is industrial pollution, the emitters must be enterprises, but environmental pollution is a negative external. What is very sexual, environmental quality is the basic interests of all citizens, residents will also produce some pollution, polluters should also pay a certain cost. Public service charges are also conducive to cultivate residents' environmental awareness."