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China Has Officially Started Collecting an Environment Tax

The first of its kind in China.

2 JAN 2018

China has always been one step ahead when it comes to the environment, and 2018 is no different.

On the first day of the new year, the Chinese state officially started collecting a new tax that seeks to protect the environment and curb pollution.


The Environmental Protection Tax Law is China's first tax dedicated solely to environmental protection. It will help establish a "green" financial and taxation system while also promoting pollution control, according to Wang Jinnan, head of the Chinese Academy For Environmental Planning.

The new law supports President Xi Jinping's public declaration in 2012 that "green hills and clear waters are the true gold and silver mines."

Since 1979, China has had a "polllutant discharge fee," which fined enterprises and state governments for pollution output.

But the fee system was far from perfect. Fee exemptions were made for certain enterprises and local governments continued to exploit loopholes in the system.

Regulators have been wanting to close these loopholes for years, and now they have finally succeeded. Last year, the state agreed to replace the flawed fee system with a proper law.

The new law allows local governments to keep all the environment tax revenues from polluting firms in an attempt to encourage regional enforcement of environmental protections.

The law also authorizes local governments to set their own tax rates on public institutions and enterprises for producing noise, air, water pollutants and solid waste.


Several cities in China, including Beijing, Shanghai and Hebei have already published their tax schemes.

Beijing in particular has gone all-out in their endeavour to curb pollution. The city has implemented a national carbon emission trading scheme and is about to introduce a green electricity certificate system.

Since 2016, the city has been sending out environmental inspectors to all corners of China. And the city's Ministry of Environmental Protection has criticized local officials in Shandong for trying to get out of mandatory industrial production cuts.

The city of Beijing hopes a new law will make environmental regulation much easier to enforce.

"Giving ownership of environmental tax revenue to local governments will help increase environmental protection investment and improve the environmental situation across the country," the State Council said in a statement.