Page 126 - Low Carbon Development in China and India
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ratios of such taxes and enabling the local governments to have more 2.2
disposable income in their green/low carbon development efforts. In
this respect, we can consider earmarking the additional tax revenue
transferred by the central government to the local governments for low
carbon development or environmental protection efforts of the latter.
Moreover, apart from greening of the existing taxes, we must also take
into consideration the impact of distribution and use of revenue from
the newly created taxes in the future—e.g., the environment tax and the
carbon tax—on the local governments’ low carbon financing efforts.
We may also consider distributing more tax revenue of the central
government to the local governments. However, given the fact that the
adjustment of tax rates and the distribution ratios require a relatively
lengthy administrative process, the above analysis can basically be
incorporated into the feasible medium-to-long-term policy packages
which aim to fund local governments in their efforts.
2.3.2 Fees
As opposed to taxes, fees are more flexible in the law-making
procedures. They have a relatively short cycle from the policy design
at the top level to their implementation, and are more flexible in their
earmarked use. Table 2.6 shows that the revenue from fees accounted
for a relatively big proportion of the non-tax revenue of the Chinese
government in 2011, and an absolute majority of such revenue was
attributed to the local governments. Therefore, reforming the existing
fees—such as increasing the pollutant discharge fee and the road
toll fee—and introducing new fees are both important sources of
funds for the local governments in their low carbon financing efforts.
However, what is worth noting is the fact that the current reform in
the fiscal systems and policies of China clearly aims to replace fees
with taxes. An excessive use of fees as a means of financing is, to
some degree, in conflict with the overall direction of the tax system
reform. Nevertheless, as a fiscal instrument which is relatively easy to
be implemented in the short term, a well-designed fee system for low
carbon growth can effectively provide additional funds for the local
governments in the short run. This section refers to existing cases of
developed countries to discuss some feasible fee systems which do
not contradict the overall fiscal system reform of China—or which are
in relatively small conflict in the short term—for low carbon growth.
In the international community, the fee policies in favour of local
low carbon growth are now relatively concentrated in the housing
and transportation areas, and the principal financing instruments in
Chapter 2 Innovative Financing for Low Carbon Development 91
disposable income in their green/low carbon development efforts. In
this respect, we can consider earmarking the additional tax revenue
transferred by the central government to the local governments for low
carbon development or environmental protection efforts of the latter.
Moreover, apart from greening of the existing taxes, we must also take
into consideration the impact of distribution and use of revenue from
the newly created taxes in the future—e.g., the environment tax and the
carbon tax—on the local governments’ low carbon financing efforts.
We may also consider distributing more tax revenue of the central
government to the local governments. However, given the fact that the
adjustment of tax rates and the distribution ratios require a relatively
lengthy administrative process, the above analysis can basically be
incorporated into the feasible medium-to-long-term policy packages
which aim to fund local governments in their efforts.
2.3.2 Fees
As opposed to taxes, fees are more flexible in the law-making
procedures. They have a relatively short cycle from the policy design
at the top level to their implementation, and are more flexible in their
earmarked use. Table 2.6 shows that the revenue from fees accounted
for a relatively big proportion of the non-tax revenue of the Chinese
government in 2011, and an absolute majority of such revenue was
attributed to the local governments. Therefore, reforming the existing
fees—such as increasing the pollutant discharge fee and the road
toll fee—and introducing new fees are both important sources of
funds for the local governments in their low carbon financing efforts.
However, what is worth noting is the fact that the current reform in
the fiscal systems and policies of China clearly aims to replace fees
with taxes. An excessive use of fees as a means of financing is, to
some degree, in conflict with the overall direction of the tax system
reform. Nevertheless, as a fiscal instrument which is relatively easy to
be implemented in the short term, a well-designed fee system for low
carbon growth can effectively provide additional funds for the local
governments in the short run. This section refers to existing cases of
developed countries to discuss some feasible fee systems which do
not contradict the overall fiscal system reform of China—or which are
in relatively small conflict in the short term—for low carbon growth.
In the international community, the fee policies in favour of local
low carbon growth are now relatively concentrated in the housing
and transportation areas, and the principal financing instruments in
Chapter 2 Innovative Financing for Low Carbon Development 91
