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China's tax reform emphasizes low-carbon economy

By Elaine Duan
0 CommentsPrint E-mail China.org.cn, June 7, 2010
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China is making an emphasis on the development of a low-carbon economy through its new round of tax reform, speeding up the adjustment of industrial structure and transforming ways of development, said An Tifu, a professor in the Finance Department at Renmin University of China.

In May, the State Council approved the policy on the reform of the economic system which involves reforms on resources tax, environmental tax, housing property tax, consumption tax, individual income tax, and urban construction tax.

The 2009 Copenhagen climate change conference sparked the development of a low-carbon economy in the world. In the future, taxes will play a more important role in saving resources and energy, reducing emissions, and protecting our environment by boosting reforms on resources tax and environmental tax. China follows this trend with tax reform and economic development.

Ma Haitao, dean of the Public Finance Department at Central University of Finance and Economics, said China's commitment to value-added tax reform reflects China's interest in low-carbon economic development, energy conservation, and emission reduction brought on by the Copenhagen conference.

There is an added opportunity when reforming resources tax. According to Ma, the reform scheme was drafted by 2006, but the reform "lost a chance due to rising international oil price." Despite an expectation of slight inflation, this year is a good time to boost the reform because of a dip in global oil prices, Ma said.

The reform on environmental tax faces more challenges as a new type of tax. According to Ding Yun, a professor in the Finance and Tax Department at the Capital University of Economics and Business, enterprises will worry about extra burdens due to building a separate environmental tax system.

Ding added that a problem in reform that urgently needs to be solved is "how to regulate current environmental charges and transform the charges into taxes."

For consumption tax, An said that improving the consumption tax system and setting different tax rates according to the extent the resources are consumed in goods will help form a resource-saving and environmentally friendly tax system.

In recent years, China has increased the consumption tax rate for some high-grade consumer goods, luxury articles, and high-emission cars. An said this change "provides a guide for proper consumption behaviors and reflects China's requirement in saving energies and resources as well."

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