Resources tax incentivizes 'long-term benefits'

A new round of resources tax reform, starting from July, may lead to a heavier tax burden, but it will have long-lasting benefits to society and help ensure resource sustainability, experts said Tuesday.

The Ministry of Finance said that manufacturers of minerals such as iron and copper will be charged a resource tax on the basis of prices rather than volumes, after similar reforms were implemented in taxing coal, natural gas, crude oil and rare earths.

Natural resources, including water and forests, will be items to be taxed in the future. Hebei province will be the first pilot region to implement a taxation on water resources, the ministry said.

Although entrepreneurs were informed of the changes when the ministry posted a statement in early May, some said they are not yet fully prepared, especially companies in heavy industries that consume large amounts of resources.

Cui Kai, a manager of a thermal power plant in Shandong province, told the China Economic Herald earlier last month that a future tax on water resources will make it harder for the company to make profits.

"Surface and ground water, which are expected to be charged at least 0.4 yuan ($0.06) and 1.5 yuan per metric ton, respectively, may raise the cost of production by 5 million yuan each year," Cui said.

Hu Yijian, an economics professor at Shanghai University of Finance and Economics, said the long-awaited reform shows the government's strong commitment to switching to a more sustainable and greener development model.

"A resources tax does not help much to increase the government's revenue compared with other sources of income－the major consideration is to encourage high resource-consuming enterprises to upgrade their facilities," said Zhang Bin, a researcher at the Chinese Academy of Social Sciences.