Local governments in China plan to include water resources in taxation, starting a new round of speedier reforms on resource tax, Economic Information reported Thursday, citing an official from Gansu Local Taxation Bureau.
It is necessary for the local governments to tax resources like groundwater and geothermal water if they seek to boost local economy and expand tax scales, said the official.
It will also help harness local resources more reasonably and give full play to the tax leverage, he added.
The idea of expanding the resource tax is not unexpected given that the central government decided to pass on the power to tax non-metallic minerals to provincial governments years ago.
One of the problems rife in the current charges levied on water resources is their administrative nature, which often results in weak enforcement from the local authorities.
If taxes replace charges to be levied, enforcers can be far stricter with the due payers, said Yang Zhiyong, financial director of National Academy of Economic Strategy with China Academy of Sciences.
But in the reforming process, governments also need to carry out more tax concessions for the most affected small and medium enterprises and raise basic living allowances to guarantee the consumption of bare necessities for low-income people, warned Jia Kang, head of Research Institute for Fiscal Science with Ministry of Finance.
In September last year, China’s State Council, the cabinet, announced a revised set of regulations concerning resource taxation, having adjusted tax rates and mechanics of levying taxes.
