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Kong Xiangzhong: Suggestions on Adjusting Tax Policy for Comprehensive Utilization of Cement Resources


Release time:

Jun 09,2013

In order to further promote the comprehensive utilization of resources and promote energy conservation and emission reduction, the Ministry of Finance and the State Administration of Taxation issued the "Notice on Value-added Tax Policy for Comprehensive Utilization of Resources and Other Products" (Caishui [2008] No. 156) and the "Notice on Supplementary Value-added Tax Policy for Comprehensive Utilization of Resources and Other Products" (Caishui [2009] No. 163) on December 9, 2008, the notice clearly stipulates: for "cement produced by rotary kiln process or cement produced by grinding process of purchased cement clinker, the proportion of mixed waste slag in cement production raw materials shall not be less than 3

In order to further promote the comprehensive utilization of resources and promote energy conservation and emission reduction, the Ministry of Finance and the State Administration of Taxation issued the "Notice on Value-added Tax Policy for Comprehensive Utilization of Resources and Other Products" (Caishui [2008] No. 156) and the "Notice on Supplementary Value-added Tax Policy for Comprehensive Utilization of Resources and Other Products" (Caishui [2009] No. 163) on December 9, 2008, the notice clearly stipulates: for "cement produced by rotary kiln process or cement produced by grinding process of purchased cement clinker, the proportion of mixed waste slag in cement production raw materials is not less than 30%" products enjoy the policy of value-added tax collection and refund. Since the implementation of this incentive policy in the mid-1990s, it has greatly mobilized the enthusiasm of cement enterprises to eliminate solid waste residue. In production, not only a large number of industrial waste residue is used in the process of cement grinding, but also waste residue matching is used as much as possible in the ratio of raw materials. This not only reduces the cost of cement production, but also contributes to China's environmental protection. This shows that this policy is a good policy for the benefit of private enterprises. However, with the technological progress and structural adjustment of the cement industry, especially in the promotion of the elimination of backward cement production capacity in recent years, it is found that the "inclusiveness" of the policy makes more backward production capacity continue to enjoy preferential policies, increasing the difficulty of eliminating backward cement production capacity. In the context of overcapacity in the cement industry, making appropriate adjustments to existing policies may be beneficial to accelerate the elimination of backward production capacity and resolve cement overcapacity.

Basic situation of waste residue utilization in 1. cement industry

In China's cement production, there are more than 40 kinds of industrial waste residues that can be used at present, and most of the 36 kinds of waste residues listed in the above-mentioned documents can be used. In 2012, China's cement clinker output was 1.34 billion tons, with a total output of 2.21 billion tons. According to the average unit cement content of 5% gypsum ore, the gypsum consumption was 0.11 billion tons, and the annual consumption of solid waste residue in the cement industry reached 22.1-13.4-1.1=0.76 billion tons. If we consider that 2.5 of the power plant desulfurization gypsum is used in the gypsum consumption, the actual solid waste consumption of the cement industry in 2012 will be 0.8 billion tons, and the solid waste utilization rate of cement products will reach 8/22.1=36.2.

During the "Eleventh Five-Year Plan" period, China's total output of cement clinker was 4.734 billion tons, 7.53 billion tons of cement were produced by adding waste residue and gypsum, 26.08 tons of solid waste were absorbed, and the solid waste utilization rate of cement products was 35%. In the "Twelfth Five-Year Plan for the Utilization of Bulk Industrial Solid Waste" issued by the Ministry of Industry and Information Technology, it is stated that during the "Eleventh Five-Year Plan" period, my country's total production of bulk industrial solid waste is 11.8 billion tons and the total utilization is 3.6 billion tons. It can be seen that the solid waste consumed by the cement industry accounts for more than 70% of the total utilization in China.

2. different cement varieties and strength grades, the utilization rate of waste slag is also different.

According to the data provided by the National Cement Quality Inspection Center, 5728 cement samples were inspected annually in 2012, of which 306 were slag cement, accounting for 5.34, mostly 32.5 grade cement. Fly ash cement accounts for only 2%; Composite cement is above 90%, and 32.5 grade cement is the main one. In 2012, I investigated and counted the cement sales of 20 large cement groups in the past two years. 32.5 grade cement accounts for about 40%,42.5 grade cement accounts for about 55%, and 52.5 grade cement and special cement account for about 5%. From this, it is preliminarily concluded that as far as the national cement is concerned, 32.5 grade cement accounts for 60% of the total, and 42.5 grade cement and above accounts for 40% of the total. However, the products of large enterprises are widely used in national key projects, thus the 32.5 grade cement of large enterprises accounts

40% of the total, 42.5 grade and above cement accounted for 60% of the total, which is really the opposite result.

According to Caishui [2008] No. 156, products with a proportion of not less than 30% of waste residue mixed in cement production raw materials enjoy the policy of immediate refund of value-added tax. However, in actual production and according to the standard of GB 175-2007 "General Portland Cement", cement with 42.5 grade and above strength cannot be mixed with 30% or more waste residue, while cement with 32.5 grade strength enjoys the preferential policy. It can be seen that large enterprises that produce high-quality and high-grade cement have made great contributions to the construction of national key projects, but enjoy less preferential policies.

Take 2012 as an example, the total output of cement is 2.21 billion tons, 60% of the 32.5 grade cement is 1.326 billion tons, after deducting 5% of the slag cement output is 0.066 billion tons, the remaining 1.26 billion tons of fly ash and composite cement output can enjoy the VAT policy of immediate refund.

According to the VAT levy and refund policy, cement enterprises actually enjoy a tax refund of 3-4% after the output tax minus the input tax. Under the condition that the average price of 32.5 grade cement is 280 yuan/ton, if 80% of the products enjoying tax refund can receive tax refund, then 12.6 × 70% × 280 yuan/ton ×(3-4)%= 84-11.2 billion yuan. This is the theoretical calculation value, in fact, the cement industry will not get so much tax rebate each year.

The adjustment proposal of the policy of 3. value-added tax is levied and refunded.

The above analysis shows that the "Value-added Tax Policy for Comprehensive Utilization of Resources and Other Products" is a good policy that is conducive to national environmental protection and mobilizing the enthusiasm of enterprises to participate in the utilization of waste residue. However, in the current environment, too much emphasis is placed on low-grade cement, which is harmful to high-quality high-grade cement and enterprise technological innovation, as well as the elimination of backward cement production capacity.

A, policy adjustment recommendations:

1, the proportion of 32.5 grade cement mixed with waste residue is not less than 30% of the waste residue from the full tax rebate to half tax rebate;

2, the proportion of 42.5 grade cement mixed with waste slag is not less than 20% of the full tax rebate;

3, the proportion of 52.5 grade cement mixed with waste slag is not less than 10% of the full tax rebate;

B. Change in total adjusted tax refund:

42.5 the output of high-grade cement is 22.1 × 40% = 0.884 billion tons, a full tax refund can be obtained at 50% (in fact, it is very difficult, due to the limitation of cement standards and other factors, it is already very good to really achieve 40%), and the average price of cement is 320 yuan/ton (52.5 the output of cement is very small), then 42.5 and above high-grade cement may be refunded: 8.84 × 50%× 320 yuan/ton ×(3~4)%= 43~5.6 billion yuan; However, 32.5 cement received 37~4.9 billion yuan after the tax refund was halved. After adjustment (43~56)+(37~49)=(80~105), so that the country's total tax rebate will not increase.

Expected effect of 4. policy adjustment

1. If the proportion of waste residue mixed with 32.5 grade cement is not less than 30%, the total utilization of waste residue will not be affected after the full tax refund is changed to half tax refund, but the cost of some 32.5 grade cement will increase by 8~10 yuan/ton;

2. After the proportion of waste residue mixed with 42.5 grade cement is not less than 20% and the proportion of waste residue mixed with 52.5 grade cement is not less than 10%, it is expected that about 30% of the cost per ton of high grade cement will be reduced by more than 10 yuan. The utilization rate of waste residue is expected to increase by 0.16 billion tons per year due to policy encouragement;

0.884 billion tons of high-grade cement × 10% more waste residue utilization rate = 88.4 million tons of waste residue on the original basis

3. Due to the increase in production costs of some backward enterprises that mainly produce low-grade cement, their market competitiveness will decrease, which will help accelerate the elimination of backward cement production capacity, resolve industry overcapacity, and improve the quality of cement products.

4, due to the production of high-grade cement mixed with waste slag can enjoy preferential treatment, enterprises are bound to increase the strength of clinker, which is beneficial to the technological progress of enterprises, can give full play to the advantages of large enterprises and advanced technology production lines.

5. Conclusion

By adjusting the value-added tax policy for the comprehensive utilization of resources of cement enterprises and adopting differential tax rates, the state has not increased the new tax rebate amount, and the utilization rate of waste residue has been improved, especially for the transformation and upgrading of the industry, eliminating backward cement production capacity and resolving overcapacity.

Of course, the adjusted policy operational level still needs to do some technical improvement.