China has passed a new law that gives local governments

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  • 26 Aug 2019 12:00 AM
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China Passes Law Allowing Regions to Set Resource Taxes

Chinese legislators approved a new law that will give local governments the authority to tax as many as 164 different resources, including fossil fuels, minerals and eventually water. Major resources, such as crude oil or rare earth minerals, will still be subject to a fixed tax rate set by the central government. However, local authorities will be able to adjust the rates levied on other products, with officials insisting it will not raise the overall tax burden on local firms. It will also lay the groundwork for a nationwide water resource tax designed to encourage efficiency and conservation. China began levying a pilot water resource tax in heavily polluted Hebei province in 2016. This will strengthen water conservation awareness and prevent the overexploitation of groundwater. Chinese firms were previously charged on the basis of how much of a resource they used, but the new tax system is based on prices rather than volume.

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