Industrial consumers and consumers of discretionary goods are set to pay hefty taxes on greenhouse gas emissions that will add up to more than $1 trillion to China’s economy, according to the latest forecast by the International Monetary Fund.
The government plans to spend $2 billion a year on this tax, which will be paid by factories and factories themselves, to offset the impact of rising energy costs, the IMF said in its report on Wednesday.
The IMF estimates that the new carbon tax, due to go into effect in 2020, will raise $1,600 per household, which would be $600 less than the $2,200 the government will spend on a carbon tax now, but still more than the previous $1 million.
The new carbon taxes, however, are expected to add up quickly, raising more than half a trillion yuan ($1.7 trillion) by 2020, according the IMF.
This is a rush job.
There’s nothing in it for the poor, the middle class, the people in the developing world, the underdeveloped countries, or the poor people of the world.
– Xi Jinping, President of ChinaThe IMF said the new tax would also provide some relief for some of the poorest Chinese.
It will be $900 a year for a family of four, a $1-million relief for those living in the worst-hit regions of the country, and a $600 reduction in income taxes for households in the richest regions of China.
However, the report noted that this relief would be insufficient to prevent many of the poor from living with chronic and disabling health problems.
This will be a rush, Xi Jinping told reporters on Wednesday as he unveiled the new plans.
There are people who have been living with the same condition for a long time, and if they can’t get help now, what hope are they going to have?
Xi also said the tax will be “fairly targeted” to households with income below $200,000, which is a huge number.
He said that the carbon tax would “contribute to a reduction in greenhouse gas emission, which has been a major challenge to China in the past.”
China has been struggling to reduce carbon emissions since it began its push to cut emissions last year, but the new taxes may help reduce emissions further.
The government is currently seeking $4.5 billion from international financial institutions to pay for the tax, but critics say the money will be better spent on fighting the effects of climate change.