New green tax to crack down on polluting firms

Chen Maozhe owns a garment dyeing factory. As the new year began, he wasted no time buying equipment that will substantially reduce waste water discharge.

Chen runs Fujian Futian Textile Printing and Dyeing Company in Fujian Province. Every year, close to 20,000 tons of textiles are dyed at his factory, which employs 300 workers. The new equipment will cost Chen almost a year’s profits, but can reduce waste water discharge by 40 percent, he said.

“Starting this year, reduced emissions will be turned into tax breaks, so now is a good time for companies like us to revamp production technology and cut emissions,” he said.

China started collecting a new type of tax — the environment protection tax — aimed at protecting the environment and cutting pollutant discharge from Monday.

Companies and public institutions that discharge listed pollutants directly into the environment will pay taxes for producing noise, air and water pollutants as well as solid waste.

“The new tax will benefit companies that have been committed to cutting emissions and saving energy. It will spur the companies to turn green,” said Liu Jianmin, director of the local taxation bureau at Jinjiang City in Fujian.

To prepare for tax collection, taxation and environmental protection departments have established a database of companies eligible for the tax.

“Those that discharge more will pay more, and those that discharge little will pay little,” said Cai Zili, an official with the State Administration of Taxation.

Tax rates are higher for pollutants that are more hazardous, Cai said. For example, the tax rate for formaldehyde is about 24 times that for smoke and dust.

Under the law, local governments will keep the tax revenue and will have the right to set tax rates. Regions that are under heavy environmental pressure, such as Beijing, Hebei and Tianjin, have adopted higher rates than others, said Cai.

“The environment protection tax is an important step to build a green taxation system in China. It is not merely a source of government revenue — it has larger social implications,” said Cai.