Local governments are setting up tax standards to facilitate Environmental Protection Tax Law effective beginning 2018. The Law grants local governments the power to determine and adjust applicable tax amounts on the basis of pollution discharge fee levels, in air (1.2 to 12 per pollution equivalent) and water pollutants (1.4 to 14 per pollution equivalent).

Fujian, Jiangsu and Zhejiang largely adopt the same tax standard as discharge fees with a slight increase. Beijing, Tianjin, Hebei and others introduce much higher tax standards. Guizhou’s tax standard will be double the level of its discharge fees, approximately that of surrounding regions. It will, to an extent, be able to avoid tax discrepancies with neighbouring provinces and avoid industries and pollution simply switching location, notes 21st Century Business Herald.

However, the biggest challenge lies in the lack of a cooperation mechanism among tax levying agencies and pollutant measurement technologies and standards. The new tax collection and management model has enterprises declare their pollutant volume and thus tax amounts, taxation departments collecting taxes, environmental protection departments supervising, and all parties sharing information, notes Yang Zhiyong 杨志勇 National Academy of Economic Strategy.