/ 25 February 2011

China to tax heavy polluters

China is to impose an environmental tax on heavy polluters under an ambitious clean-up strategy being finalised in Beijing, say experts familiar with the programme.

The tax will be included alongside the world’s most ambitious renewable energy scheme and fresh efforts to fight smog when the government unveils the biggest and greenest five-year plan in China’s modern history in March.

After three decades of filthy growth, the measures are designed to pull the country from the environmental mire and make it a leader in the low-carbon economy. But sceptics question whether the policy will have any more success than previous failed efforts to overcome the nexus of corrupt officials and rule-dodging factory bosses.

The environmental tax — which will levy fees according to discharges of sulphur dioxide, sewage and other contaminants — is intended as a disincentive for polluting industries, many of which have flocked to China to take advantage of low costs and weak regulations.

“The environment tax is going to happen. This is evident in the proposals for the next five-year plan,” said Ma Zhong, director of the School of Environment and National Resources at Renmin University in Beijing. “It is likely to be levied nationwide, but there is also a possibility that it will initially be introduced in selected regions.”

Domestic media predict the tax could come into force in 2013. Carbon dioxide, a key concern given China’s status as the world’s biggest greenhouse gas emitter, may be included in the system at a later stage, though the issue is being debated.

“Some want to put them together, but I think a carbon tax should be different and at a higher level from the environmental tax,” said Zhang Jianping, a senior economist at the Institute for International Economic Research in the National Development and Reform Commission.

The revenues would go to the central government, prompting calls for it to fund the restoration of badly damaged ecosystems or to compensate victims of industrial contamination. —