A new environmental tax that kicks in on 1 January could pose huge challenges for China’s aquaculture and seafood processing firms if the tax, which is intended to pay for long overdue effluent and sewage treatment systems, is extended to the sector.
An explanatory note on the new tax published when it was approved at this year’s National People’s Congress listed seafood and meat farmers as being amongst its targets. The note explained the tax will be levied according to the amount of effluent produced; farmers can also apply for tax exemptions if they install waste treatment plants on their farms.
The looming tax has already caused mass shutdowns in the pork-farming sector, in effect squeezing supply and raising pork prices. The swine sector has been a particular target given the expansion of large new farms releasing huge amounts of untreated slurry.
But the aquaculture sector is characterized by its fragmentation, with thousands of smaller producers, and is therefore harder to regulate. However, that’s changing, as ongoing consolidation of aquafarms in China – especially in the shrimp sector – could see them targeted.
This is all happening as a new national Environmental Inspection Office, which dispatches enforcement teams to target air, water, and soil pollution nationwide, has become a bugbear of Communist Party officials around China, who are now graded on environmental conditions in their bailiwicks.
There are fewer places to hide for water polluters since China started to compile a national database of data on water quality in order to monitor and combat pollution, while also forcing local officials to enforce national legislation. Several business operators interviewed by SeafoodSource compared the environmental inspection teams to the feared discipline inspection teams sent out by the Communist Party’s Central Discipline Inspection Commission to root out corruption.
China’s central government is projecting the new tax will raise CNY 50 billion (USD 7.5 billion, EUR 6.4 billion) per year to help clean China’s notoriously polluted waterways. The government statement announcing the enactment next year promises “serious consequences” for those who don’t pay the tax, which will be collected by national tax authorities. Those who fail to declare and pay the new environment and cause “major damage” will face large fines, jail, and a shutdown of their farms, it said.