Debate resurfaces over China carbon tax plan

Calls for a tax on carbon emissions have resurfaced on the mainland in recent weeks, with a top policy official at the Ministry of Finance publicly highlighting the need to overhaul tax policies to improve environmental protection and energy conservation.

But analysts said that even if Beijing mustered the resolve to launch such a controversial tax, it could be many years before it was fully implemented and having the desired effect, given the likely opposition from affected large state enterprises whose bottom lines were at stake.

Jia Chen, the head of the ministry's tax policy division, wrote in an article published on the ministry's website that the central government should revamp its consumption tax regime to help meet goals on energy savings and emission controls.

"We should proactively push forward the reform of taxation related to the environment, such as replacing the existing pollution discharge fee by an environmental protection tax," Jia wrote. "Carbon dioxide emissions should be subject to this tax."

In its 12th five-year plan, Beijing set a target to cut carbon emissions per unit of economic output by an average annual rate of 17 per cent between 2011 and 2015. It also told coal-fired power plants to cut sulphur dioxide emissions per unit of output by an average 12.4 per cent and nitrogen oxides by 15.1 per cent.

Coal-fired power producers have been paying pollution discharge fees on their sulphur gas emissions for more than a decade, although Beijing has offered financial incentives to encourage them to install scrubbers for such gases. Carbon dioxide has so far not been subject to levies.