Chinese legislators considering resource tax on geothermal and other natural resources

Forbidden City, Beijing, China (source: flickr/ David Stanley, creative commons)
Alexander Richter 1 Jan 2019

As part of planned tax incentives for resource conservation and environmental protection, Chinese legislators are considering a resource tax, among others for geothermal energy based on a case-by-case basis.

Chinese lawmakers have called for more tax incentives for resource conservation and environmental protection in a new draft law under deliberation at the top legislature, so recent news from China.

The suggestions were raised last week at a penal deliberation on a draft law on resource taxes, which was submitted to the ongoing session of the National People’s Congress (NPC) Standing Committee for its first reading.

Liu Haixing, a member of the committee, said the resource tax concessions in the draft mainly focus on improving the utilization rate of resources, making it insufficient for promoting resource conservation and ecological protection.

Liu suggested to further the reform of the green tax system on resources and to give better play to the positive role of resource tax concessions in bolstering resource conservation and protection.

Zhao Xiangeng, another member, said the draft involves taxing geothermal energy, and whether or not it is appropriate to levy a tax on geothermal energy should be analyzed on a case-by-case basis.

Fossil energy is still the main source of primary energy consumption in China, and the country should support the development of clean, low-carbon and green energy like geothermal energy to make it an alternative or even a major source of energy, Zhao said. “If we want to tax geothermal, there must be a much lower rate of tax.”

Committee member Lyu Wei proposed promoting green development into the aim of formulating this law, saying the bill should assist rational, scientific and intensive development and utilization of resources.

The draft law was submitted to the top legislature for review as the country pushes forward law-based taxation reform.

The draft was based on an interim regulation on resource taxes which was promulgated by the State Council in 1993.

About 932.5 billion yuan (135.3 billion U.S. dollars) was collected in resource taxes between 1994 and 2017 in China, with an annual increase rate of 15.9 percent, data from the Ministry of Finance show.