China: Environmental tax will add to production costs

It has been reported that China will introduce an environment protection tax in January next year. This will be the first tax reflecting a ‘green tax system’ aimed at creating awareness in society of the need for environmental sustainability. Manufacturing enterprises will be affected as they will be encouraged to increase investment in environmental protection.

Currently most of provinces in China have specific environmental taxes the standards of which vary considerably depending on the carrying capacity of the local environment, pollutant types as well as the development goals behind the environmental laws.

The highest environmental taxes are levied in Zhejiang, Hubei, Hunan, Guangdong, Guizhou, Yunnan and Shanxi provinces. The tax levels are moderate in Jiangsu, Henan and Sichuan provinces. But the taxes are very high in Beijing, Tianjin and Hebei province.

As a result of the new taxes production costs are set to rise for wood product manufacturers but it will take time before the impact of the taxes can be assessed.