7.2 Water Resources Fee/Tax
153
when revising the 1988 Water Law, and more recently as part of ongoing discussions
about deepening overall reform. The first proposal was not implemented because
the collection procedure was in the preliminary stage and the requirements to levy
tax were not in place due to the poor metering and monitoring system. The second
proposal has support from the political willingness to implement and was confirmed
in 2016. Consequently, the water resources fee will be reformed as a resources tax,
and all the conflicting departmental interests discussed in the following sections will
be eliminated.
Share between central and local levels. This issue concerns the interests between
the MWR and its RBOs involving the local water resources management bureaus.
The share is not defined in the 2002 Water Law and 2006 Regulation, but in the 2008
Water Resources Fee Collection and Use Management Methods. The 10% central
share is used for central and river basin level water resources management.
Collection agency. Before the 1998 governmental restructuring, the Ministry of
Construction was responsible for urban groundwater management, and the MWR
was tasked with managing other sources. In most provinces, the fee was collected by
two agencies: the urban water-saving agency under the Ministry of Construction and
the water resources management agency under the MWR. Some provinces issued
two policies to handle fees, such as Hebei Province (Hebei Provincial Government
1981, 1988). After 2003, the WAD became the only collection agency.
Levy on agricultural water abstraction. Agriculture is the largest water user in
China. However, due to this sector’s fundamental role in China’s economy and food
security, it has always been exempted from water fees. In some provinces, such as
Beijing and Shiyang River Basin in Gansu Province, quota-exceeding abstraction
is required to be levied (Beijing Development et al. 2007; Standing Committee of
Gansu Provincial People’s Congress 2007), but the implementation is questionable.
Mineral characteristics of groundwater. Deep groundwater is considered mineral
resources by the geological and mineral resources department. Therefore, a groundwater resources fee is levied by the geological department. However, there are longstanding disagreements over this fee, and its collection has been overturned in some
provinces. In others such as Hainan, though, both a water resources fee and a mineral
resources compensation fee are collected.
Levy on power sector. Because the energy sector was more powerful than the water
sector, in 1995 the Office of the State Council ordered that the fees for hydropower
water use of stations under the central government and for the recycled cool water
of thermal power stations should not be collected (Office of the State Council 1995).
The Supreme Court supported this decision (Administrative Court of the Supreme
Court 1996). Another case was on coal-mining drainage. In 1987, the Ministry of
Financing decided not to levy on drainage activities because these are necessary
aspects of production, according to suggestions from the Ministry of Coal Industry
(Ministry of Financing 1987). At present, however, all these abstractions are subject
to charges.
153
when revising the 1988 Water Law, and more recently as part of ongoing discussions
about deepening overall reform. The first proposal was not implemented because
the collection procedure was in the preliminary stage and the requirements to levy
tax were not in place due to the poor metering and monitoring system. The second
proposal has support from the political willingness to implement and was confirmed
in 2016. Consequently, the water resources fee will be reformed as a resources tax,
and all the conflicting departmental interests discussed in the following sections will
be eliminated.
Share between central and local levels. This issue concerns the interests between
the MWR and its RBOs involving the local water resources management bureaus.
The share is not defined in the 2002 Water Law and 2006 Regulation, but in the 2008
Water Resources Fee Collection and Use Management Methods. The 10% central
share is used for central and river basin level water resources management.
Collection agency. Before the 1998 governmental restructuring, the Ministry of
Construction was responsible for urban groundwater management, and the MWR
was tasked with managing other sources. In most provinces, the fee was collected by
two agencies: the urban water-saving agency under the Ministry of Construction and
the water resources management agency under the MWR. Some provinces issued
two policies to handle fees, such as Hebei Province (Hebei Provincial Government
1981, 1988). After 2003, the WAD became the only collection agency.
Levy on agricultural water abstraction. Agriculture is the largest water user in
China. However, due to this sector’s fundamental role in China’s economy and food
security, it has always been exempted from water fees. In some provinces, such as
Beijing and Shiyang River Basin in Gansu Province, quota-exceeding abstraction
is required to be levied (Beijing Development et al. 2007; Standing Committee of
Gansu Provincial People’s Congress 2007), but the implementation is questionable.
Mineral characteristics of groundwater. Deep groundwater is considered mineral
resources by the geological and mineral resources department. Therefore, a groundwater resources fee is levied by the geological department. However, there are longstanding disagreements over this fee, and its collection has been overturned in some
provinces. In others such as Hainan, though, both a water resources fee and a mineral
resources compensation fee are collected.
Levy on power sector. Because the energy sector was more powerful than the water
sector, in 1995 the Office of the State Council ordered that the fees for hydropower
water use of stations under the central government and for the recycled cool water
of thermal power stations should not be collected (Office of the State Council 1995).
The Supreme Court supported this decision (Administrative Court of the Supreme
Court 1996). Another case was on coal-mining drainage. In 1987, the Ministry of
Financing decided not to levy on drainage activities because these are necessary
aspects of production, according to suggestions from the Ministry of Coal Industry
(Ministry of Financing 1987). At present, however, all these abstractions are subject
to charges.