Battling recurring pollution enveloping its cities, China has passed a new law to levy environment tax on polluters, specially on heavy industries.
The Environment Tax Law was adopted by the legislature, the National People's Congress (NPC) Standing Committee which concluded its meeting here on Sunday.
However, carbon dioxide, one of the major contributors to global warming, is not included in the levying list.
The law followed nearly week-long red alert due to heavy smog over Beijing and 23 other cities last week leading to imposition of odd-even number system to regulate vehicles and closure of schools.
The law, to enter into force on January 1, 2018, will be key to fighting pollution, Wang Jianfan, director of the Ministry of Finance tax policy department said. China has collected a "pollutant discharge fee", since 1979.
In 2015, it collected 17.3 billion yuan (about $2.5 billion) from some 280,000 businesses, Wang said.
However, some local governments exploit loopholes and exempt enterprises which are otherwise big contributors to fiscal revenue.
For years, regulators have suggested replacing the fee system with a law.
"The new law will reduce interference from government," Wang said.
It will also improve tax payers' environmental awareness, forcing companies to upgrade technology and shift to cleaner production, Wang said.
Under the new law, companies will pay taxes ranging from 350 yuan ($60) to 11,200 yuan ($1870) per month for noise, according to their decibel level.
It also set rates of 1.2 yuan on stipulated quantities of air pollutants, 1.4 yuan on water pollutants and a range of five to 1,000 yuan for each tonne of solid waste, state-run Xinhua news agency reported.
For instance, polluters will pay 1.2 yuan for emission of 0.95 kg of sulfur dioxide and 1.4 yuan for one kg of chemical oxygen demand (COD).
Under the new law provincial-level governments can raise the rates for air and water pollution by up to ten times after approval by the people's congresses.
Lower rates may also be applicable if emission are less than national standards.
The law only targets enterprises and public institutions that discharge listed pollutants directly into the environment.
Punishment for evasion or fraud are not specified, but offenders will be held liable in line with the law on administration of taxation and the environmental law.
With more than a year still to go before the law comes into effect, Wang said authorities will make preparations including drafting a regulation for implementation of the law. China is the world's largest emitter of greenhouse gases, due to its heavy reliance on coal to provide electricity to its population of 1.37 billion.