Coal Resource Tax Reform

At present, the coal that is collected from the quantity will be subject to ad valorem and the tax burden will generally increase. The process of reforming the coal resources tax that has been delayed for several years is expected to be implemented soon.

The resource tax reform plan involving coal has been reported to the State Council. It was planned to be implemented before the national "**" this year, but it was later postponed.

It is understood that this resource tax reform includes two aspects: First, the coal resource tax is subject to ad valorem pricing; second, the administrative charges related to coal, oil and natural gas are eliminated, and “tax-to-tax reform” is implemented.

The reason why the reform of the coal resources tax included in the tax reform plan for many years has not been implemented is due to the large differences among parties, especially the resistance from relevant coal companies. Coal companies fear that the resource tax will be assessed after the price The tax burden cannot be sustained. However, the increasing pressure on China's environment, especially the hazy weather in winter, has become increasingly severe. As a result, resource tax reform has accelerated.

Earlier, Minister of Finance Lou Jiwei wrote that from an economic development point of view, resource taxes can easily lead to low levels of tax burden, and it is difficult to bring into play the role of promoting resource conservation and environmental protection. The reform is imminent. The focus is to promote the ad valorem reform of ad valorem resources such as coal and other important mineral products, and to clean up relevant charges**; to appropriately increase other resource tax amounts that are still subject to quantitative assessment and further play a regulatory role in taxation.

The current reform plan has reached consensus in all aspects, and the resistance has been eliminated and is waiting for an appropriate time to implement it.

Why is ad valorem mandatory?

The resource tax is a type of tax that is taxable on various taxable natural resources and is used to adjust resource differential income and to reflect paid use of state-owned resources. At present, China’s resource tax collection is based on the Provisional Regulations of the People's Republic of China on Resource Tax and the Implementing Rules of the Provisional Regulations of the People's Republic of China on Resource Tax promulgated by the State Council. It has not yet risen to the legal level. The resource tax includes seven tax items such as crude oil, natural gas, coal, ferrous metal ore, non-ferrous ore ore, other non-metallic ore, and salt, but its income is less than 1% of the total fiscal revenue. It is a small tax. .

Since the 1980s, China has started to levy a resource tax on natural resources. The levy model has been calculated on a case-by-case basis, that is, tax is calculated based on the sales volume of taxable resource products and multiplied by the prescribed unit tax.

In 1994, the reform of the tax sharing system made major adjustments to the resource tax policy, expanded the scope of collection, and adjusted the tax burden, but it still maintained the original method of quantity measurement. In the case of long-term control of resource prices and low price volatility, quantitative measurement has its rationality and relative stability.

In the past decade or so, there has been an apparent unilateral upward trend in the prices of resource products. It is difficult to make resource taxes increase with the increase in the prices of resource products and resource companies as a result of the quantitative pricing method, thus losing the “proper development of reasonable resources”. "The significance of tax regulation. Especially when prices of many resource products have been greatly increased, the proportion of resource tax in the prices of such products is too low. The resource tax levy has highlighted both the former and the reduction of tax revenues in various regions. It shows the function of increasing fiscal revenue.

Since 2010, a new round of resource tax reforms has started. On June 1, 2010, Xinjiang took the lead in carrying out pilot reforms of crude oil and natural gas resource taxes. Taxes on oil and gas were based on sales, and resource taxes were charged on an ad valorem basis. In December of the same year, this reform was extended to 12 provinces and regions in the west. In November 2011, the reform of the ad valorem resource tax was promoted throughout the country.

For a long time, the proportion of coal in China’s primary energy production and consumption accounted for about 70%. Relative to oil and gas resources, the reform of the coal resources tax ad valorem measurement involves a wider scope, greater impact, and more complex reforms. Therefore, the reform of the coal resources tax was not launched at the same time as the reform of the oil and gas resource tax, but was shelved. After the oil and gas resources, the reform of coal's ad valorem taxation has become the "biggest bone".

Clear tax is the key

One of the reasons for the repeated delays in the reform of the coal resource taxation policy is how the various current charging systems will go.

Chen Long, an associate researcher at the Institute of Finance of the Ministry of Finance, believes that in China's history of resource management, there is a distribution relationship of taxes, rents, and fees. To further deepen the reform of resource taxes, it is necessary to clarify the nature and role of taxes, fees, and rents: First, resources. Taxes, which are formed based on public power, mainly promote the rational development and protection of resources, internalize negative externalities in resource development, and reduce the level of environmental damage and pollution. The second is resource royalties, which are based on all The main function of those rights is to safeguard all the rights of the state, realize the use of resources for compensation, protect and promote the rational development of resources, mineral resources compensation fees, mining area use fees, etc., which are generally broadly used internationally. “Rights money”; third is exploration and mining rights, which is based on ownership rights derived from a type of property rights - mining rights and the state's public management powers for exploration and development of the mining industry. It embodies two kinds of powers. The fourth is a special income fund, which is formed based on the power of the state's public management, mainly with mineral resources. Excess profits generated as a collection of objects, the main role is to regulate profits.

Chen Long believes that deepening the reform of the resource tax needs to further clarify the functional orientation of resource tax. It cannot simply “represent tax by rent,” “rent by tax,” or “tax by fee,” but by exploring the establishment of prices, taxes, and fees. The mechanism of renting and renting linkages shall establish a reasonable sharing mechanism between the central, provincial and county (city, district) governments, give full play to their respective positive roles, and jointly promote the rational development and use of resources.

Regarding the charging of coal resources, the situation in each province is not the same. Zhao Jialian, secretary-general of the China Coal Economic Research Association, said that because of the pilot project that had been carried out before, Shanxi Province, a major coal province, set up a separate coal industry for sustainable development in the country. Now it is necessary to “clear taxes and fees”. Shanxi hopes to transfer this A resource tax, but this will push up the resource tax rate. The levying standards of the ** have been adjusted several times. The current levying standards are 18 yuan per ton for thermal coal, 23 yuan per ton for anthracite, and 23 yuan per ton for coking coal.

Zhao Jialian stated that if Shanxi province raises the resource tax rate to a certain extent, other provinces may also follow suit, and the whole country will improve. "It may be difficult to control the situation." In addition, due to the interests of local governments, the cleanup of coal is very difficult. In particular, the provinces have issued a lot of “local policies” for fees. Now the money collected is very “convenient”. Once it is turned into resource tax, it will be used for budget management. It's not too "convenient" to get up.

Prior to this, Jinzhong Finance Bureau of Shanxi Province had conducted a mapping of the coal resource tax situation in the city. Jinzhong City had a total of 42 coal mines in 2010. The coal resources tax was imposed on a specific basis. The tax amount was adjusted to 3.2 yuan per ton for electric coal and 8 yuan per ton for coking coal. The 42 coal mines turned over to the state in various taxes of 2,177,703,800 yuan in 2010, accounting for 17.54% of sales revenue, turned in various kinds of **7001147 million yuan, accounting for 5.64% of sales revenue, and paid administrative fees of 3542.6211 million yuan. The proportion of sales revenue is 2.85%. The total tax and fee is 323,149,900 yuan, accounting for 26.04% of sales revenue. Among them, tons of coal sales are 535.89 yuan, tons of coal tax are 93.99 yuan, tons of coal are **30.22 yuan, and tons of coal are administratively charged at 15.29 yuan. yuan.

The Finance Bureau of Jinzhong City believes that the tax rate of coal enterprises in the city is 26.04%, which is in line with China's macro tax burden in 2010. Among them, tax revenue accounted for 67%, and various types of ** and administrative fees turned in accounted for 33%, which was a relatively high proportion. In addition, the collection of fees has many departments and the cost is high. At the same time, various departments have taken up a large amount of funds for the funding of their own departments, which means that they are not able to provide enough funds for environmental management.

In 2012, several provinces with large coal resources had proposed to carry out trials of ad valorem prices for coal resources. The State Council pointed out that if pilots are carried out, tax increases must be linked to clean-up charges, that is, some current coal resource charge items will be cancelled. For local governments, they have the right to exempt from fees and charges. Once taxes are raised and fees are reduced, local revenues may be reduced and the authority to control the fees may be lost. Therefore, the pilot provinces no longer fight for it.

According to the aforementioned authoritative sources, the current reform plan has reached consensus on various aspects in respect of clearing and taxation, and the resistance has basically been eliminated.

The uncertainty of tax basis is also one of the reasons for the long-term delay in the reform of the coal resources tax.

According to the relevant officials of the State Administration of Taxation, the coal resource tax is mainly taxed on raw coal, but it is very difficult to see the actual raw coal. Basically, it has to undergo preliminary washing and processing, so even the taxable prices cannot be found. Price calculation. In addition, many coal miners are self-employed, and even the accounts are not sound. The transactions are mostly cash transactions, the tax price cannot be determined, and the ad valorem index is easy to breed.

According to Sun Gang, a researcher at the Ministry of Finance’s Institute of Finance and Taxation Policy, there are many types of coal, and it is relatively simple to calculate quantities. Because prices vary and fluctuations are great, it is very difficult to determine which price is to be used for ad valorem. grasp. In particular, some small coal mines sell coal and do not open bills and have no accounts at all. It is difficult to accurately determine their prices.

How is the tax rate

At present, the ad valorem tax rate for oil and natural gas is 5%, and people in the industry believe that the tax rate is low. If all the coal charging items are transferred to the resource tax, does it mean that the ad valorem tax rate for coal will be very high?

The relevant person in charge of the Xinjiang Local Taxation Bureau analyzed that the coal resource tax rate should be at least 8% in order to keep Xinjiang’s current local interest in taxes and fees coexist.

The Finance Bureau of Jinzhong City calculated the tax rates of 2%, 3%, 4%, and 5% according to the ad valorem and calculated the 42 coal mines in the city. The conclusion is that the tax rate for each resource tax is increased by 1 percentage point. Rate and tax contribution rate increase at the same time by 1%, affecting the rate of profit decline by 1%. Taking the resource tax rate of 5% as an example, the tax contribution rate has increased from 17.54% of the amount collected to 22.51%, and the profit rate has dropped from 25.16% to 20.19. %, the adjustment rate is not too large, and the profit level is still higher than other industries.

Accordingly, the Jinzhong Finance Bureau believes that the implementation of the tax collection method with an ad valorem tax rate of 5% will have obvious effect on income increase and will have little impact on corporate profits. In this way, not only the difficulties caused by unscientific expropriation were raised, but also the amount of environmental compensation funds increased from 29.23 yuan to 50.88 yuan per ton, and the reforms achieved remarkable results.

A government official in the Inner Mongolia Autonomous Region had previously stated that the current resource tax collection is less than 1% of the price per ton of coal, which is almost negligible in the value of coal. This is extremely unreasonable. The official suggested that the coal resource tax rate should be 5%-10% of sales.

It is understood that at present, under the specific measurement model, the national resource tax per ton of coking coal is subject to 8 yuan, and the tax standards for other coals vary slightly from province to province, ranging from 2 yuan to 4 yuan per ton. The total amount is only over 100 billion yuan.

Sun Gang stated that at present, almost one province collects a single standard for collection, and it is not yet clear whether the differences between different regions or the unified tax rate after the ad valorem evaluation. He believes that the coal resource tax reform does not need to be piloted like the oil and gas resource tax. It is better to spread it in full and implement actual problems before it is adjusted.

In terms of opening time, Sun Gang believes that it depends on the production and sales of coal. At present, the coal market is not booming, and there is a large backlog of coal. The coal companies have difficulties in operating. If the reforms are introduced immediately, increasing the price after tax increases will increase the company's difficulties. If the price increases, the sales market will become even more depressed.

It is understood that after entering the peak of the annual contract for power coal in 2014, the Qinhuangdao Thermal Coal Index continued to fall for 11 weeks, the cumulative average price of 5,500 kcal/kg thermal coal fell 101 yuan per ton, and the profits of the coal industry declined substantially.

Zhao Jialian said that the current general view is that the ad valorem tax rate is set at 2% to 10%. The central government gives such a margin, and the specific standards will be set by the local government itself. He believes that the current tax rate can not exceed 5%, and it is best to be between 2% and 4%, which is already quite high relative to the tax burden. Coal companies currently face two major problems: First, the decline in economic efficiency, large-scale loss of coal companies; Second, coal overcapacity. In any case, the coal resource tax must be implemented as soon as possible. "It has been dragged on for too long and it can't be justified."

People in the industry believe that the resource tax reform will undoubtedly increase the tax burden on coal companies, and companies must promptly adopt response measures, including increasing the recovery rate of coal, increasing the level of technology, trying to reduce costs, integrating the industrial chain, and implementing diversified operations.

The aforementioned authoritative sources stated that the reform of the coal resources tax will be fully implemented and no pilot project will be conducted separately. The implementation time will depend on the decision of the State Council leadership.

In recent years, Jia Kang, director of the Finance Department of the Ministry of Finance, has repeatedly called for the reform of the coal resources tax as soon as possible. He believes that the tax burden of a ton of coal is now irrelevant. If it becomes a 5% ad valorem tax, the tax burden will increase many times. And then supporting the power reform, the front end is the return of electricity to the property value of the product to enter into the network pricing mechanism, the back end is the electricity transmission to the wholesale and retail links, there will be the bottom of the wage-led reform. In addition, this kind of reform must be derived to the final consumer goods, water and electricity are more expensive, the middle-income class needs to change the consumption model, the government must also properly raise the minimum subsistence standard in a timely manner.

Shanxi Provincial Department of Finance recently released news that Shanxi Province will continue to suspend the withdrawal of “two coal funds” from January 1st to the date of the official announcement of the implementation of the National Coal Resource Tax Reform Plan. "Two coal funds" refers to the mining environment restoration and management guarantee fund and the coal mine conversion production development fund. It is the two economic policies in the trial of Shanxi coal industry sustainable policy measures. Coal industry insiders believe that suspending the collection of coal funds will effectively reduce the burden on coal companies, and it is also awaiting the reform of resource tax ad valorem.