The Chinese government is to introduce one of the world’s largest green tax regimes, announcing earlier this week that a new national resource tax will come into effect from November 1.
The State Council said on Monday that new levies on oil and natural gas previously trialled in Xinjiang and 11 other provinces will be rolled out nationwide from next month, alongside additional new taxes on rare earth ores and coking coal.
The volume-based tax will impose a five to 10 per cent tax on crude oil and natural gas sales, alongside a further 0.40-60 yuan per tonne levy on rare earth ores and an 8-20 yuan a tonne coking coal tax.
Reforms were also announced to the tax regime governing the country’s onshore and offshore oil and gas fields, replacing a royalties-based levy with a new resource tax.
The government said the wide-ranging reforms were designed to protect resources and limit environmental damage as the country seeks to meet a series of demanding green targets set out in its latest five-year plan.
However, analysts said Beijing was also seeking to raise funds for provincial governments that have been tasked with accelerating the rate of development in the country’s poorer regions.
A large chunk of the new tax revenue is expected to be invested in flagship low carbon projects in rural provinces, including new nuclear reactors, wind farms, and high-speed rail networks.
The tax reforms are the latest in a series of new green policies adopted by the Chinese government, including new renewable energy incentives, plans for electric vehicle infrastructure, and proposals for regional carbon trading trials.
The changes also highlight the potential financial impact on carbon-intensive firms that fail to anticipate the emergence of green taxes, with analysts predicting leading Chinese utilities such as PetroChina and Sinopec could have to lower their earnings forecasts as a result of the new taxes.
