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China's Role and Contribution in the Global Governance of Climate Change: Institutional Adjustments for Carbon Tax Introduction, Collection and Management in China

Journal of World Energy Law and Business, Oxford University Press, Volume 8, Issue 6, December 2015

12 Pages Posted: 29 Nov 2015 Last revised: 30 Jan 2016

Haifeng Deng

Tsinghua University - School of Law

Paolo Davide Farah

West Virginia University (WV, USA); gLAWcal - Global Law Initiatives for Sustainable Development (United Kingdom); University Institute of European Studies - IUSE (Turin, Italy)

Anna Wang

Tsinghua University - School of Law

Date Written: November 24, 2015

Abstract

As global climate change and its adverse effects have caused serious consequences, the Chinese Government is speeding up on energy saving and emissions reductions, becoming much more active on the climate and environment front. According to the work schedule of the Ministry of Finance, construction of the environmental protection tax system is one essential part of the forthcoming green tax reform in China. On 10 June 2015, the Cabinet’s Legislative Affairs Office issued a Draft Environmental Protection Tax Law of the People’s Republic of China (hereinafter referred to as the ‘Draft EPT Law’) to solicit opinions and comments. This action received much attention and prompted discussion both at home and abroad. The Draft EPT Law shows the trend of transforming pollution charges into tax, and starts a green reform in administrative management by means of financial tools. Though the law does not include carbon dioxide with taxable pollutants, it leaves space for future carbon taxation. With the increase of green reform in the future, carbon tax will no doubt be put on the priority list of the Chinese Government, at which point the Government will face three major challenges. First, the current unsatisfactory tax system environment will jeopardize carbon tax. It is necessary to repeal the overlaps between the Draft EPT Law and carbon tax, other energy taxes and non-environmental taxes, and introduce carbon tax into the current tax system without throwing off the order of the overall tax structure. Secondly, in spite of the design of the new tax structure, the administrative organization of tax management remains a very critical problem. It will be necessary to establish an orderly interactive relationship horizontally between the environmental agency and tax agency, and vertically between the central and the local authorities. Thirdly, a new carbon tax will cause economic slowdown in the short term. In addition to offering tax rebates, reductions and subsidies, a system of penalties could offset negative effects and optimize positive outcomes of emission reduction.

Keywords: Carbon Tax, China, Chinese Law, Policy, Climate Change, Greehouse Gases, GHG, Emissions, Draft of Environmental Protection Law, Draft EPT Law, Pollution Charges, Administrative Law, Tax System, Energy Taxes, Management, Tax Rebates, Subsidies, Reductions, Institutional Reforms

JEL Classification: Q40, Q42, Q43, Q48, K30, K32, K33, O13, Q20, Q32

Suggested Citation

Deng, Haifeng and Farah, Paolo Davide and Wang, Anna, China's Role and Contribution in the Global Governance of Climate Change: Institutional Adjustments for Carbon Tax Introduction, Collection and Management in China (November 24, 2015). Journal of World Energy Law and Business, Oxford University Press, Volume 8, Issue 6, December 2015. Available at SSRN: https://ssrn.com/abstract=2695612

Haifeng Deng

Tsinghua University - School of Law ( email )

Law School (Mingli Building)
Room106
Beijing, Beijing 100084
China

Paolo Davide Farah (Contact Author)

West Virginia University (WV, USA) ( email )

325 Willey Street
Morgantown, WV 26506
United States

HOME PAGE: http://paolofarah.wordpress.com

gLAWcal - Global Law Initiatives for Sustainable Development (United Kingdom) ( email )

United Kingdom

HOME PAGE: http://www.glawcal.org.uk/

University Institute of European Studies - IUSE (Turin, Italy) ( email )

Turin
Italy

HOME PAGE: http://paolofarah.wordpress.com

Anna Wang

Tsinghua University - School of Law ( email )

Law School (Mingli Building)
Room106
Beijing, Beijing 100084
China

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