Currently, China is experiencing a prolonged period of low resource prices. The timing for reforming the resource tax is quite appropriate, and the reform measures themselves are reasonably designed—overall, this approach helps to reduce resistance to the reform. Nevertheless, the reform will still face certain challenges and tests. To ensure that the reform objectives are effectively realized, we must adapt to prevailing trends and adopt strategic approaches in advancing the resource tax reform.

Following 5 After the comprehensive implementation of the “business tax to VAT” reform starting this month, China will— 7 Moon 1 Starting from today, a comprehensive reform of the resource tax will be fully implemented, including expanding the scope of resource tax collection and launching pilot programs for water resource taxation; implementing a reform to base mineral resource taxes on value rather than quantity; thoroughly reviewing and abolishing all fees and funds related to mineral resources; appropriately setting the rate levels for the resource tax; strengthening the management of preferential tax policies for mineral resources; and enhancing the efficiency of comprehensive resource utilization.

The resource tax is the tax category most closely linked to natural resources and the ecological environment, and it serves as an important tool for regulating resource allocation. This resource tax reform will comprehensively eliminate fees and funds related to mineral resources, thereby helping to reduce the burden on enterprises. The reform can also raise the prices of resource-based products, prompting polluters to bear the costs of environmental and resource protection, thus encouraging enterprises to conserve resources and driving adjustments in industrial structure and transformations in development models. Moreover, the resource tax reform will grant local governments greater authority over tax administration, which can boost local initiative and increase the share of resource taxes in local fiscal revenues, enabling resource-rich regions to gradually establish local tax systems centered around resource taxes.

Currently, China is experiencing a prolonged period of low resource prices. The timing for reforming the resource tax is therefore quite opportune, and the proposed reform measures are reasonably designed, generally helping to reduce resistance to the reform. Nevertheless, the reform will still face certain challenges and tests. Take, for example, the pilot reform of the water resource tax: Given the close links between water resources and people’s livelihoods and the economy, even small changes in water tariffs can trigger high social sensitivity. If the imposition of the water resource tax significantly affects water prices, it could potentially give rise to various social issues. Moreover, since the resource tax is levied based on the value of the resource, its impact on prices tends to be relatively substantial. If... CPI Continuing to remain at a low level creates favorable conditions for reform; however, if during a certain period... CPI As prices rise to high levels, this will naturally have an adverse impact on the advancement of resource tax reform. Moreover, the premise of resource tax reform is to replace fees with taxes. Under the current economic downturn and declining local fiscal revenues, how local governments can coordinate among various stakeholders during the collection of resource taxes—avoiding the cumulative imposition of multiple taxes and fees—and genuinely ensure that enterprises are not burdened further—as mandated by the central government—has become a new challenge testing local governments' governance capabilities.

The primary goal of this comprehensive advancement of the resource tax reform is to streamline the relationship between resource taxes and fees by fully implementing the reforms of abolishing fees and introducing a value-based taxation system, thereby establishing a resource tax system that is standardized and fair, appropriately regulated, and highly efficient in collection and administration. This will enable the resource tax to effectively play its roles in generating revenue, regulating the economy, promoting the efficient and intensive use of resources, and protecting the ecological environment. To ensure that these reform objectives are effectively realized, the advancement of the resource tax reform must be guided by the prevailing trends and employ strategic approaches.

First, we must proceed in a step-by-step manner. Building on the implementation of value-based taxation reforms for coal, crude oil, natural gas, and other such resources, we should comprehensively roll out these reforms to all other mineral resources. We should also actively create the necessary conditions to gradually introduce resource taxes on natural resources such as water, forests, grasslands, and tidal flats.

Second, it is essential to rationally determine the tax burden and reduce the arbitrariness in local collection of resource taxes. Localities should conduct comprehensive surveys and studies on their respective regions’ resource utilization patterns, resource tax revenue sources, enterprise operating conditions and tax burdens, as well as resource price levels. On the basis of fully soliciting enterprises’ opinions and taking into account their actual operating conditions and capacity to bear burdens, they should draw on the experience gained from resource tax and fee reforms in sectors such as coal, and reasonably set the tax base and tax rates for resource taxes. This will enhance the flexibility of the tax system and prevent an increase in enterprises’ tax and fee burdens.

Third, we must ensure that the work of replacing fees with taxes is fully implemented. All regions and relevant departments must strictly adhere to the unified regulations issued by the central government, effectively implementing policies to abolish or suspend the collection of fee-based funds. Under no circumstances should they delay or refuse to comply with these policies, nor should they continue collecting fees under other guises. We must earnestly carry out the central government’s requirements for alleviating the burden on enterprises.