Carbon tax included in China’s new green tax policy plan

China is to introduce a set of new taxation policies designed to preserve the environment, including a tax on carbon dioxide emissions, according to a senior official with the Ministry of Finance (MOF). This is in addition to establishing seven pilot carbon markets this year with the goal of creating a national cap-and-trade scheme by the end of 2015.

In an article published on the MOF's website Jia Chen, head of the tax policy division, said the government will collect the environmental protection tax instead of pollutant discharge fees, as well as levy a tax on carbon dioxide emissions. These will be raised by local tax authorities rather than the Environmental Protection Department, he said.

The new green tax policy appears to be in line with the doctrine of "ecological civilization" which has become increasingly prominent within Chinese Communist Party. In his work report to the party's 18th National Congress last December President Hu Jintao said: "We must give high priority to making ecological progress, work hard to build a beautiful country, and achieve lasting and sustainable development of the Chinese nation."

In his article Jia said the government is also looking into the possibility of taxing energy-intensive products such as batteries, as well as luxury goods such as aircraft that are not used for public transportation.

To conserve natural resources, the government will push forward resource tax reforms by taxing coal based on prices instead of sales volume, as well as raising coal taxes. A resource tax will also be levied on water, according to the article.

The article did not specify when the new measures will be implemented.

At the begining of last year MOF experts suggested levying a carbon tax in 2012 at 10 yuan (USD1.6) per tonne CO2, increasing to 50 yuan (USD8) per tonne by 2020.

China is the world's largest emitter of greenhouse gas and has set goals for cutting emissions. The government has vowed to reduce carbon intensity per unit of economic output, by 40 to 45 percent by 2020 in comparison to 2005 levels.