Water usage should be taxed, and the tax structure for oil,
natural gas and coal reformed to favor conservation, lawmakers
The Financial and Economic Committee of the National People's
Congress (NPC) included the suggestion in its review of the
government budgets proposed by the Ministry of Finance during the
annual NPC national session.
The committee did not offer any suggestions about how the water
tax should be levied, but analysts agreed that it could be part of
a fee-to-tax reform for usage.
In its current form, the rate covers a water fee, resource fee
and wastewater treatment fee.
"The move will regulate water use through taxation and promote
the economical use of this resource," said Han Meng, a researcher
at the Institute of Economics of the Chinese Academy of Social
The committee also suggested that the system for taxing oil,
natural gas, and coal be reformed. Taxes on these resources are
currently levied according to the amount of production. For
example, coalmines are taxed according to output.
In recent years, the prices of energy resources like oil have
soared while China's resource tax has remained largely unchanged.
The resource tax on oil, for example, did not change until 2005,
when it was raised to 14-30 yuan (US$1.8-3.9) per ton from 12-14
yuan (US$1.5-1.8) per ton.
"The suggested change will better reflect the market value of
the resource," said Han.
Resource-rich provinces have been advocating a resource tax
reform that would revalue the prices of resources.
"The new system, if approved, will help save resources through
economic means," said Han.
The national policy advisors at the Chinese People's Political
Consultative Conference (CPPCC), meanwhile, said more attention
should be paid to the interests of resource-rich provinces, which
provide the raw materials that fuel the national economy, but "have
not been adequately rewarded.”
Cai Jiming, a member of the CPPCC, told his fellow delegates
that more revenue from resource taxes should stay in local coffers
to help develop the economies of these provinces, which are largely
in the underdeveloped western region.
(China Daily March 14, 2007)