Study on Design of Wastewater Tax:
from Wastewater Pollutant
Discharge Levy to Environmental Tax
Ge Chazhong
Chinese Academy For Environmental Planning
Nov 4, 2010 Bangkok
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Why This Topic?
Governme Research topic under National
Water Pollution Control Key Special
Program for 11th five year period
ntal decision on introducing environmental
tax
Issues related to pollution levy on water
pollutants discharge
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Presentation Outline
Brief introduction
Comparison
Design
Obstacle
Conclusion
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I. Brief introduction of China’s
wastewater pollutant discharge
levy policy
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I. Brief introduction
The first economic policy for
environmental protection in China
• In late 1970s
• “polluter pay principle”
• According to the amount of pollutants
discharged using pollutant equevelents
• played a positive role
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I. Brief introduction
• Nationwide policy
– 31 provincial level
– 333 prefecture level
– 2,860 county level cities
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I. Brief introduction
• 80.775 billion Yuan (RMB) (From the new
regulation in 2003 to the end of June 2009)
including water and air pollutants as well as
solid wastes
• 147.95 billion Yuan (RMB) (the
cumulatively fees in about 30 years from
1982)
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(I) Current situation of Pollutant discharge levy
collection and change trend of wastewater
Figure 1 Water Pollution Discharge fee Collection in 2004-2009
(Data source: Statistical Yearbook on Environment for All Years)
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I. Brief introduction
• wastewater and waste gas large
proportion
• wastewater pollutant discharge fee
a down trend
• waste gas
an upward
trend
• noise and hazardous waste a very
small proportion and does not
change considerably
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I. Brief introduction
Causes of declining trend for water
pollutant
urban wastewater treatment facilities
being put into use
 New policies on reducing emissions
from “concentration control ” to
“ total quantity control ”
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I. Brief introduction
Need to improve
• Legal basis for discharge levy system is
insufficient
• Pollutant discharge charge rates are low
and levied scopes are incomplete
• Levy procedure is complicated and
workload is high
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II. Comparison between wastewater
pollutant discharge levy and
environmental tax
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II. Comparison
Both are economic instruments in
accordance with the principle of “polluter
pay principle”
Both can contribute to pollution
reduction through internalizing external
cost
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II. Comparison
differences
• different roles
• different recognitions
• different departments for implementing
these policies
• different use of funds
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Can wastewater tax solve problems
of low collection rate of wastewater
pollutant discharge levy???
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II. Comparison
• can raise the collection rate to
some extent
• may not be quickly raised to a very
high level due to different reasons
for current low collection rate
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III. Design for wastewater tax
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III. Design
basic principles to design wastewater tax:
Effectiveness
Fairness
Operability
Simple tax base
Effectiveness
Stable revenue
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III. Design
Collection object and scope
• wastewater discharged from pollution
sources, including industrial ones and
urban WWTPs
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III. Design
Taxpayer
all those that discharge wastewater to
water body, including industrial
enterprises, public institutions,
commercial and service enterprises,
wastewater treatment plants and other
organizations and excluding residents.
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III. Design
Tax base and its calculation
wastewater emission quantity
Tax amount payable = wastewater
emission quantity ×industrial pollution
intensity factor × unit tax amount
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III. Design
Industry
Nonferrous metal alloy manufacturing
Inorganic base production
Machine finish paper and paper board production
Dye production
Complex fertilizer production
Beer production
Hoisting and conveying equipment manufacturing
Refit vehicle manufacturing
Entire vehicle manufacturing
Manufacturing of tracked special purpose vehicles for
industries and mines
Pollution intensity factor
0.5
0.5
1.2
2.5
1.0
0.5
1.0
0.8
0.5
0.5
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III. Design
Enterprises have the emission quantity
data by monitoring and being verified by
environmental protection departments,
the quantity data should be used first as
tax base.
Otherwise, follow this formula :
Wastewater emission quantity = water
intake quantity (product yield)
×wastewater emission factor
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III. Design
Tax rate
0.2Yuan(RMB)/ton
Tax rate should be determined to be higher
than pollution treatment cost and
enterprises’ bearing capability should be
considered
In the preliminary stage it can be
approximately equivalent to the present
discharge levy rates
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III. Design
Tax preference
• The enterprises that adopt advanced
technologies and install and normally
operate wastewater treatment system
should be given preferential policies
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(III) Comparison between wastewater emission tax amount
and discharge fee collection amount
Wastewater
Fresh
water
emission
consumption
amount
(10,000t)
(10,000t)
Enterprise name
Nonferrous
metal
alloy manufacturing
Discharge fee (10,000Yuan)
COD
Ammonia
PetroleumTotal
nitrogen
Calculation
of
emission
tax
amount
(10,000Yuan)
271.53
43.41
2.68
0.80
2.48
5.97
4.34
353.70
2.48
12.10
2.38
0.04
14.53
0.25
156.00
98.00
1.45
1.45
23.52
Machine
finish
paper
and
paper
board production
22.50
10.80
1.08
1.08
2.59
Complex
production
57.30
10.60
0.30
0.30
2.12
61.35
41.40
1.28
1.29
4.14
10.93
2.73
0.09
0.09
0.55
Refit
vehicle
manufacturing
9.86
4.50
0.31
0.04
0.35
0.72
Entire
vehicle
manufacturing
117.60
82.32
0.72
0.02
0.74
8.23
Manufacturing
of
tracked
special
purpose vehicles for
industries and mines
3.66
2.93
0.08
0.01
0.08
0.29
Entire
vehicle
manufacturing
23.38
19.87
0.87
0.50
1.37
1.99
1087.82
319.04
20.96
3.09
27.24
52.88
Inorganic
base
production
Machine
finish
paper
and
paper
board production
fertilizer
Beer production
Hoisting
conveying
equipment
manufacturing
Total
0.01
and
3.20
Ta ble 2 Co mpa riso n be twee n Ente rprise s’ Waste wate r Disc harge fee
Colle ction Amo unt a nd Waste wate r tax Amo unt
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IV. Analyze the obstacle for changing
wastewater pollutant discharge fee to
wastewater tax
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IV. The obstacle
Institutional obstacle
The relationship between environmental
protection departments and pollution
emitting enterprises will be greatly
reduced
The deterrence of environmental
protection departments is weakened
How to balance the benefits of different
regions is a difficulty
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IV. The obstacle
Technical obstacle
Emission collection rate is difficult to be
directly converted to tax rate
Tax base of wastewater tax is difficult to
be calculated
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IV. The obstacle
Policy coordination
• Its combination with financial system reform
must be considered
• It is necessary to consider how to ensure the
fund for environmental protection investment
through financial policies
• It is necessary to accurately deal with relations
with present value added tax, consumption
tax, resource tax, customs dues and income
tax
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V. Conclusion
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V. Conclusion
Compared with charge, tax has some
advantages:
• Tax collection to some extent can
overcome charge randomness, arrears
and refusal to pay
• Combining wastewater tax with other
taxes can save collection cost
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V. Conclusion
• Some obstacles still exist in converting
discharge fees into environmental tax
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V. Conclusion
• It is inappropriate to convert
wastewater pollutant discharge levy to
wastewater tax in the near term.
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Thank you!
Please visit http://www.caep.org.cn
E-mail:gecz@caep.org.cn
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