Source: China Rare Earth Portal

As a separate tax law in China that specifically embodies the "green tax system" and promotes the construction of ecological civilization, the Environmental Protection Tax Law was officially implemented on January 1, 2018. At present, all provinces in China (except Heilongjiang and Xizang) have announced the specific applicable amount of environmental protection tax in their own regions according to their own development. According to industry predictions, after the introduction of environmental taxes, their tax amount will far exceed the current scale of environmental pollution charges. Overall, the emission units of atmospheric and water pollutants, as well as solid waste, are greatly affected. At the same time, the increase in tax targets and the setting of tax incentives, regulation and suppression will greatly promote the transformation and upgrading of related industries.

The collection of environmental taxes can be seen as a re division of corporate interests. The rare earth industry is a major emitter of "water, gas, and slag" in the entire non-ferrous industry. Among them, the mining of rare earth minerals, especially the mining and beneficiation of ion type rare earth minerals in the south, which are located upstream of the industry chain, generated a large amount of rare earth tailings during the production process due to the use of pool leaching and heap leaching processes in the early stages. The idle and piled up rare earth tailings ponds (垻) or outside of the ponds (垻) resulted in a large amount of rare earth solid waste that was not properly disposed of and comprehensively utilized, and became taxable solid waste for the current period. At present, the rare earth in-situ network well layout leaching method widely used in southern ion type mines does not damage the surface soil vegetation of the mountain, but the infused leaching agents (such as ammonium sulfate) combine a large amount of acidic wastewater in the primary product of rare earth ore leaching solution. The collection and treatment of this wastewater requires a large and complex pipeline network layout to collect and collect, resulting in high environmental protection investment and operating costs. Direct discharge also incurs high pollution equivalent taxes and fees. The subsequent selection, smelting and separation processes in the rare earth industry chain cannot be directly treated with low-cost biochemical treatment due to the high concentration of salt in the discharged water. Most of the wastewater in the rare earth industry chain needs to be treated with a three-level wastewater treatment design to meet the standards, and the high operating costs make it unbearable for enterprises. In addition, rare earths also generate corresponding waste gas, solid water leaching slag, acid soluble slag, etc. during the smelting and separation process, which will also increase the taxable production costs of enterprises. Implementing strict pollution equivalent taxation will force rare earth enterprises to face a dilemma in the short term. It can be said that outstanding investment in pollution control is a key bottleneck that hinders the rapid development of China's rare earth industry.

The current introduction of environmental protection tax will have a certain impact on the tax burden of rare earth industry units in the short term, because environmental protection tax implements a fixed tax rate, and the difference in corporate tax burden will be reflected in the competition of product prices. From the perspective of long-term effects, the "labor pains" brought about by environmental tax burdens will force the rare earth industry to adopt a series of technical measures such as transformation, elimination of high emission and high pollution products, upgrading and adjusting product structure to reduce overcapacity, reducing individual enterprise scale, and enhancing product industry concentration. On the other hand, it also reflects the early emphasis on environmental protection and the early implementation of pollution control, as well as the transformation and upgrading of processes in rare earth enterprises. The environmental tax burden will not only not increase, but will also show a significant trend of reduction, because meeting the taxable environmental indicators can not only save environmental costs, but also strive to obtain preferential treatment in national tax collection and other industrial policies. The enterprise reflects the benefits of energy conservation and environmental protection.

The way out for the rare earth industry to cope with the introduction of environmental protection taxes is to focus on the innovation of enterprises' own technology and the improvement and upgrading of production process technology. Although there may be sustained environmental investment that increases production costs in the short term, in the long run, the burden will be shared by reducing environmental taxes and increasing the benefits of energy conservation, consumption reduction, and comprehensive recycling and utilization, based on the cost-benefit analysis of enterprises.