China Environmental Law

Zhang Lijun, Vice Minister of Environmental Protection recently announced that work on “introducing [an] environmental tax . . . will be the focus of energy-saving and pollutant reduction schedule in 2009.” 

Grizzled observers of China’s environmental policy development will not get too excited at this news.  The idea was floated at least as early as October 2007, when Pan Yue (remember him?) was quoted as saying “[w]e are actively promoting this idea [of an environmental tax].”  Exactly one year ago, Xinhua reported

Chinese government departments of tax and environment will try to work out a taxation plan to promote environmental protection in 2008 and the candidate plans are now under appraisal.

The environment tax, one of the key taxation policies China plans to push forward this year, is going through careful study and appraisal by the Ministry of Finance, State Administration of Taxation and State Environmental Protection Administration.

So, reports of the pending enactment of environmental taxes must be viewed with at least a pinch of skepticism.  If and when these taxes are imposed, what would they look like?  The Xinhua article of a year ago, noted that “three candidate plans of collecting environment tax” were advanced:

• “pay according to profits:” the government collects tax from companies in accordance with how much they earn from the products which consume resources or pollute the environment. 
• “pay according to pollution:” companies would pay tax according to how much pollutants they discharge (including sulfur, carbon dioxide, sewage, solid waste and other forms of pollutant). 
• “pay according to consumption:” consumers of polluting products, such as fossil fuel ¹, ozone-consuming commodities, fertilizer and pesticide, would pay the tax.

A year ago Xinhua quoted a “Chinese political advisor” as saying that conditions for environmental tax legislation were “basically ripe.”  Given the economic downturn, the conditions may not be quite so “ripe” today, but you never know, 2009 could turn out to be the year of the environmental tax in China.

Vice Minister Zhang also set forth “six fields [that] should be focused” in 2009 to achieve the energy-saving and pollutant reduction targets of the 11^thFive -Year Plan.  In the middle of December, MEP Minister Zhou chaired a meeting of the MEP Party Group and set forth 8 measures that the environmental protection department should carry out in 2009.  We’ll review China’s 2009 environmental plan that emerges from these pronouncements tomorrow.