New law gives China’s regions power to tax resources
- Crude oil and rare earths will remain taxed at fixed central government rate
- System to pave the way for a nationwide levy to encourage water efficiency, official says
Chinese legislators have approved a law that will give local governments the authority to tax as many as 164 resources, including fossil fuels, minerals and eventually water, the Ministry of Finance said on Monday.
The National People’s Congress, China’s top legislature, approved the resource tax law, which would take effect in September next year, the ministry said.
Officials said it would not raise the overall taxes on local companies.
Major resources such as crude oil or rare earths would remain subject to a fixed tax rate set by the central government, but local authorities would be able to adjust the rates levied on other products, said Xu Guoqiao, a senior inspector with the taxation department at the Ministry of Finance.
The law will enable authorities to provide tax relief for depleted, low-grade mines or regions that have suffered natural disasters. It would also allow tax exemptions to be applied to help policy strategies such as the development of coal-bed methane, Xu said.
It would lay the groundwork for a nationwide water resource tax designed to encourage efficiency and conservation, he said. China began levying a pilot water resource tax in heavily polluted northern Hebei province in 2016.
