7.2 Water Resources Fee/Tax
151
resources circumstances and promoting the rational allocation, saving, and protection of water resources; coordinating surface water and groundwater development to
prevent groundwater overdraft; encouraging low-consumptive water use; reflecting
sectoral differences; and considering social affordability. The NDRC then classified
fees into surface water and groundwater groups. The groundwater group consists
of the purposes of agriculture, urban public water supply, industry and commerce,
special sector, and others; besides these, the surface group adds hydropower and
tubular thermal power use. The special sector includes car washing, bathing, golf
courses, ski fields, and others. Furthermore, the NDRC developed low limits for
province groups, divided according to water resources and socio-economic development, ranging from 0.1 to 1.6 RMB/m
3 for surface water and 0.2–4 RMB/m
3
for groundwater. Additionally, agricultural and rural domestic abstraction were
exempted. However, fees were levied on quota-exceeding groundwater use in 2014,
a lower standard was applied in mining dry water reuse, a higher standard used in
the groundwater overdraft zone, and penalty overcharges on exceeding-plan/quota
abstraction were required to be implemented (NDRC et al. 2013).
In 2015, the state requested the promotion of water resources fee reform, research
on levying a water resources tax, and pilots in groundwater overdraft regions (State
Council 2015). Therefore, the Ministry of Financing and State Administration of
Taxation selected Heibei Province as the pilot area, considering the extensive reform
coverage and complexity. The pilot taxation scheme was conducted in a form of
water resources fee-to-tax reform on surface water and groundwater. The tax is a
specific duty based on water abstraction volume, requiring that the taxation rate of
water-intensive sectors, plan-exceeding use, and groundwater abstraction in overdraft
zones will properly increase, while other uses will maintain the same level as the
water resources fee. The notice also mentioned that the pilot would be gradually
expanded to other provinces, and the reform would eventually be fully implemented
nationally (Ministry of Financing and State Administration of Taxation 2016). The
pilot in Hebei Province started on July 1, 2016 (Ministry of Financing et al. 2016).
In 2017, based on the experiences in Hebei Province, the pilot was extended to
nine other provinces, including Beijing, Tianjin, Shanxi, Inner Mongolia, Shandong,
Henan, Shaanxi, Ningxia, and Sichuan (Ministry of Financing et al. 2017). These
provinces cover regions in northern and southern China, including water-shortage
and water-plentiful areas. According to this reform process, the water resources
fee-to-tax reform will soon be implemented in all provinces.
Thus, over more than 30 years, the collection of water resources fees spread from
NCP to northern China and then the whole country, to some extent representing
regional developments in water shortages in China, gradually shifting from urban
groundwater to all water abstractions, and then from industrial to domestic and
agricultural use. Over the same period, the fee standard was raised rapidly. A water
resources fee system has now been developed and fully applied in China. After full
collection in regions, sources, and sectors, the fee-to-tax reform is fast promoted.
At the end of 2013, the surface water resources fee average across 31 provinces
was 0.205 RMB/m
3 for domestic use and 0.282 RMB/m
3 for industrial use, while the
average groundwater fee was 0.649 RMB/m
3 for domestic use and 0.778 RMB/m
3 for
151
resources circumstances and promoting the rational allocation, saving, and protection of water resources; coordinating surface water and groundwater development to
prevent groundwater overdraft; encouraging low-consumptive water use; reflecting
sectoral differences; and considering social affordability. The NDRC then classified
fees into surface water and groundwater groups. The groundwater group consists
of the purposes of agriculture, urban public water supply, industry and commerce,
special sector, and others; besides these, the surface group adds hydropower and
tubular thermal power use. The special sector includes car washing, bathing, golf
courses, ski fields, and others. Furthermore, the NDRC developed low limits for
province groups, divided according to water resources and socio-economic development, ranging from 0.1 to 1.6 RMB/m
3 for surface water and 0.2–4 RMB/m
3
for groundwater. Additionally, agricultural and rural domestic abstraction were
exempted. However, fees were levied on quota-exceeding groundwater use in 2014,
a lower standard was applied in mining dry water reuse, a higher standard used in
the groundwater overdraft zone, and penalty overcharges on exceeding-plan/quota
abstraction were required to be implemented (NDRC et al. 2013).
In 2015, the state requested the promotion of water resources fee reform, research
on levying a water resources tax, and pilots in groundwater overdraft regions (State
Council 2015). Therefore, the Ministry of Financing and State Administration of
Taxation selected Heibei Province as the pilot area, considering the extensive reform
coverage and complexity. The pilot taxation scheme was conducted in a form of
water resources fee-to-tax reform on surface water and groundwater. The tax is a
specific duty based on water abstraction volume, requiring that the taxation rate of
water-intensive sectors, plan-exceeding use, and groundwater abstraction in overdraft
zones will properly increase, while other uses will maintain the same level as the
water resources fee. The notice also mentioned that the pilot would be gradually
expanded to other provinces, and the reform would eventually be fully implemented
nationally (Ministry of Financing and State Administration of Taxation 2016). The
pilot in Hebei Province started on July 1, 2016 (Ministry of Financing et al. 2016).
In 2017, based on the experiences in Hebei Province, the pilot was extended to
nine other provinces, including Beijing, Tianjin, Shanxi, Inner Mongolia, Shandong,
Henan, Shaanxi, Ningxia, and Sichuan (Ministry of Financing et al. 2017). These
provinces cover regions in northern and southern China, including water-shortage
and water-plentiful areas. According to this reform process, the water resources
fee-to-tax reform will soon be implemented in all provinces.
Thus, over more than 30 years, the collection of water resources fees spread from
NCP to northern China and then the whole country, to some extent representing
regional developments in water shortages in China, gradually shifting from urban
groundwater to all water abstractions, and then from industrial to domestic and
agricultural use. Over the same period, the fee standard was raised rapidly. A water
resources fee system has now been developed and fully applied in China. After full
collection in regions, sources, and sectors, the fee-to-tax reform is fast promoted.
At the end of 2013, the surface water resources fee average across 31 provinces
was 0.205 RMB/m
3 for domestic use and 0.282 RMB/m
3 for industrial use, while the
average groundwater fee was 0.649 RMB/m
3 for domestic use and 0.778 RMB/m
3 for