Levy targets heavy polluters, won't have much impact on farm products: experts
The first environment tax declaration period in China started on Sunday, and although some industries are likely to face rising costs, inflation is not likely to rise, experts said.
The Environmental Pollution Tax (EPT), which went into effect on January 1, is a binding measure to tackle pollution. The tax replaces the pollutant discharge fee, which authorities had collected for four decades.
An employee from Shanghai-based chemical company BASF received on Sunday the first environmental pollution tax receipt from the local taxation bureau of the Shanghai Pudong New Area, which was also the first receipt of its kind in the country, domestic news site thepaper.cn reported.
After the tax took force, officials from taxation bureaus in different provinces explained to enterprises and individuals the tax procedures such as the scope of the tax, tax rates and the calculation basis.
"It's been a major focus for us in the past three months," an employee of a taxation bureau in Central China's Hubei Province, who preferred not to be identified, told the Global Times on Sunday.
The law provides guidelines for how much tax companies will have to pay for emitting different types of pollutants. Factories will have to pay 1.2 yuan to 12 yuan ($0.19 to $1.91) for each unit of atmospheric pollutant they emit. For example, that range of taxes will be levied for each 950 grams of sulphur dioxide.
Regions and provinces had unveiled different EPT rate standards by the end of 2017, taking into account local pollution challenges and industrial structures, which would be less than 1 percent of the total corporate tax, according to the website of the State Administration of Taxation (SAT).
"It's a smooth transition from the pollutant discharge fee to the EPT, which won't make any change in terms of tax burdens for polluting enterprises," the employee from the taxation bureau said.
From 2003 to 2015, total pollutant discharge fees collected reached 211.6 billion yuan ($33.66 billion), the SAT website showed. The SAT said in a post in February that more than 260,000 enterprises would be involved in the first environment tax declaration period.
Still, there are companies that see the new law as a new financial burden. Besides heavy polluters such as steel and cement manufacturers, the agriculture sector will face increasing costs in the short term, domestic fertilizer industry information sit fert.cn reported in mid-March. Some pesticide makers may also pay "millions of yuan" under the EPT, fert.cn estimated.
Still, the increasing costs for fertilizer producers will not be reflected on farm products, Liu Xuezhi, a senior expert on macroeconomics at the Bank of Communications, told the Global Times on Sunday.
"Prices of farm products fluctuate following seasonal changes and weather, so the implementation of the EPT will have little impact on that," he said.
Consumer Price Index (CPI) is expected to have posted a mild rise in March, the expert said.
"However, the EPT will have bigger impact on industries, including papermaking, steel and coal," he said.
CPI quickened to 2.9 percent in February, according to the official data released on March 9. This year's official target for the CPI is "about 3 percent," according to the central government's website.
While authorities are cracking down on pollution and levying taxes on businesses that have caused heavy pollution, the tax burden will not raise product prices, Liu Jianwen, professor at the Peking University Law School, told the Global Times.
"The major target [of the EPT] is to make companies to be more conscious of environmental protection," he said.
The first declaration period will run from Sunday to April 15, according to the SAT.
