China will speed up environmental protection tax legislation
2025-09-30 11:13:17
**Abstract:** Recently, the State Administration of Taxation conducted an investigation on environmental protection tax in Haidian District, Beijing. During the visit, officials listened to reports from the Beijing Municipal Bureau of Local Taxation and the Environmental Protection Bureau regarding the collection of environmental protection fees. They also discussed the progress of environmental tax reform and explored ways to further advance it. The next step involves promoting environmental protection tax legislation as a reference for future policy development.
The urgency of addressing air pollution, such as smog, and the ongoing challenges in water pollution control have significantly accelerated the pace of environmental tax reform. As a form of punitive taxation, the goal of the environmental protection tax is to make polluters bear higher costs, pushing the reform toward a more structured legislative path.
During the "Twelfth Five-Year Plan," the government proposed levying environmental protection taxes on items with heavy regulatory responsibilities and well-established technical standards, aiming to gradually expand the scope of taxation. The Third Plenary Session of the 18th CPC Central Committee emphasized the need to promote environmental protection fees. This year’s government work report also highlighted the importance of advancing environmental protection tax legislation.
According to officials from the Policy and Regulation Department of the State Administration of Taxation, the finance, taxation, and environmental protection departments have been actively working on the legislative process. In 2013, the Ministry of Finance, the State Administration of Taxation, and the Ministry of Environmental Protection submitted a proposal for environmental protection tax legislation to the State Council. The Legislative Affairs Office of the State Council has since reviewed the draft based on public feedback. The next phase will involve cooperation with the office to refine the draft and submit it for further review, eventually seeking approval from the Standing Committee of the National People's Congress.
At this year’s “Two Sessions,†the deputy director of the Legislative Affairs Commission of the NPC Standing Committee mentioned that the draft environmental protection tax law was developed by relevant State Council departments. When conditions are suitable, the State Council will submit the bill to the NPC Standing Committee for deliberation.
Although China currently has some taxes related to environmental protection—such as consumption tax, resource tax, and vehicle and vessel tax—it lacks specific taxes targeting pollution, environmental damage, or product classification. A true environmental protection tax, widely implemented in many Western countries, is still missing from China’s tax system.
International environmental taxes typically include five categories: carbon tax, sulfur tax, water pollution tax, noise tax, and solid waste tax. The United States has long maintained an environmental tax policy. Despite an increase in the number of vehicles, carbon dioxide emissions have dropped by 80% compared to the 1970s, leading to significant improvements in air quality.
“There are two major challenges in implementing environmental taxes in China,†said Bai Jingming, deputy director of the Ministry of Finance’s Finance Department. “First, how to coordinate with other tax reforms, such as the resource tax and value-added tax; second, how to align with current environmental charges like sewage fees and mineral development protection fees. It can be said that the implementation of environmental tax affects every part of the fiscal and taxation system.â€
Qi Dongsheng, deputy director of the State Administration of Taxation, added that environmental protection tax legislation must take into account resource environmental sustainability and social development capabilities. It should be promoted in different fields, playing a key role in pollution prevention and energy conservation.
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