China Pollution Tax Plan Submitted to Cabinet, Daily Reports

China’s tax department has proposed a pollution levy to the cabinet, a move that may increase raw- material prices, the Economic Information Daily reported, citing an unidentified government official.

The plan covers discharge of sulfur dioxide and waste water and excludes carbon emissions, the newspaper, an affiliate of the official Xinhua News Agency, said today, without specifying the rates. The proposal is aimed at a “smooth transition” from a discharge fee that’s currently used, according to the report.

Increasing concerns about pollution have led to confrontations between local governments and residents, including a protest last month in the southwestern city of Shifang over the construction of a molybdenum copper plant. The government is stepping up measures against industrial accidents after ConocoPhillips (COP), part-owner of China’s biggest offshore oilfield, last year caused the country’s worst spill since PetroChina Co. (857) leaked oil in Dalian in 2010.

Questions faxed to the State Administration of Taxation by Bloomberg News didn’t get an immediate response.

The pollution tax may add pressure on coal-fired power utilities, building-material companies and steel and metal producers to increase prices to help cover higher costs, the newspaper reported, citing Wang Jinnan, vice president at the Chinese Academy for Environmental Planning.

Zijin Mining Group Co. (2899), China’s biggest gold miner by market value, declined 0.4 percent to HK$2.59 as of 10:27 a.m. in Hong Kong. PetroChina, the nation’s biggest energy producer, fell 2 percent to HK$9.66.

An acid leak at Zijin Mining’s copper and gold mine in July 2010 poisoned enough fish in the Ting River to feed 72,000 people for a year. Dalian’s beaches and port were closed by an oil spill by PetroChina at the nation’s largest crude terminal.

China may invest 346 billion yuan ($54 billion) in the five years through 2015 to prevent pollution of “key” water sources, China Securities Journal reported May 18, citing a joint statement from the environmental protection, finance and water ministries and the National Development and Reform Commission.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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