China may Launch the Taxation System on Polluting Enterprises

China is considering levying a tax on polluting businesses to better protect the environment, a senior government official said.

Zhang Lijun, vice minister of environmental protection, said collecting environmental taxes from polluting enterprises was one of the directions of the country's tax system reform.

"It has been put on the agenda of the ministries of finance, environmental protection and the state administration of taxation," Zhang told a press conference.

"We are jointly studying the issue, and when conditions are ripe, we'll launch the taxation system on polluting enterprises," he added.

The government had earmarked 210 billion yuan (30.7 billion U.S. dollars) for environmental protection from the 4-trillion-yuan stimulus package for boosting domestic demand during the global economic downturn, Zhang said.
It had also enforced stricter penalties on companies that failed to reduce pollutant emissions, including fines of more than 50 million yuan on a polluting power plant and an administrative penalty on a county head in northern province of Hebei last year, he said.

The efforts had helped improve the nation's environment, with obvious changes in some environmental quality indicators in 2008, including the decline of permanganate in surface water and the sulfur dioxide in the air in cities, he said.

Zhang admitted that air in a few cities remained "very polluted" and the problem of acid rain remained serious.
Surface water pollution was still grim, and the environmental problems in rural areas were increasingly prominent, he warned.

He dispelled the worries that the stimulus plan, which involves many new projects, might cause environmental problems and that governments might loosen requirements for environmental evaluation in order to approve more projects.

"The majority of the 4-trillion-yuan investment will be spent on infrastructure, and projects to improve the ecological environment and the people's living standards. There is no single industrial project," Zhang said.

"I don't see environmental problems in the stimulus plan because we have set a 'firewall' to block projects that could cause serious pollution or consume too much energy and natural resources," he said.

He said the ministry would carry out inspections on projects covered by the stimulus plan to check how they comply with certain requirements for environmental protection in the second part of this year.

"As far as we know, the implementation of the approved projects is going on well (in terms of environmental protection)," he said.

The Ministry of Environmental Protection approved environmental evaluation reports of 365 projects, involving a total investment of 1.44 trillion yuan between November last year and May.

It also rejected or suspended 29 chemical, petrochemical, steel and coal-burning power generation projects, citing their high energy consumption and high pollution. The total cost of the projects was estimated at 146.79 billion yuan.