To promote the healthy development of China's steel industry, in addition to strengthening internal capabilities within enterprises, National People's Congress representative and Secretary of the Party Committee as well as Chairman of Shougang Group, Zhao Mingge, believes that the government should provide support through policy measures. To this end, during this year's National People's Congress and Chinese People's Political Consultative Conference sessions, Zhao Mingge put forward three proposals to promote the healthy development of the steel industry.

Firstly, he suggested restoring export tax rebates for high-end steel products to stabilize and promote the industry's healthy development. In order to ensure the security of domestic iron resources and implement the task of reducing crude steel production, the government canceled export tax rebates for all steel products in two phases in 2021. While this policy adjustment led to a temporary decline in steel export volumes, Zhao Mingge believes it also significantly weakened the competitiveness of our high-end products in international markets, putting China at a disadvantage in competition with major rivals such as Japan and South Korea. It is worth noting that Japan and South Korea adopt an export tax rebate policy for their steel products. In Japan, the consumption tax for steel mills is 10%, equivalent to China's value-added tax. When exporting steel, the mills temporarily pay 10% of the tax to the tax authorities, which is refunded after the goods are declared for export. Japan's steel export quotations are based on the "net price" excluding the 10% tax for overseas pricing. In South Korea, a single tax rate of 10% is applied to the sale, import, and provision of goods and services, with the option to deduct input tax. The country imposes a zero tax rate on goods exported and services provided internationally. "I propose the restoration of export tax rebates for high-end steel products," Zhao Mingge said. This would help drive industry enterprises to continue connecting with international high-end customers and advanced standards, promoting the high-quality development of the steel industry and foreign trade.

Secondly, to enhance the resilience of the industrial chain and ensure the availability of iron ore resources, it is proposed to reduce the tax burden on domestically produced iron ore. China's iron ore resources are unevenly distributed, resulting in high manufacturing costs and substantial tax burdens. Taking Shougang Mining Company as an example, the tax and fee burden (excluding value-added tax) for every ton of iron concentrate in the past three years was approximately 23.11%, higher than the tax burden on iron ore in foreign countries. For instance, the tax burden for Australia's Karara mine is around 4.5%, Brazil's tax burden is generally around 10%, and certain states in the United States and Canada impose a tax burden of 6.5% on iron ore enterprises.

In light of this, Zhao Mingge suggests that relevant government departments should introduce supportive policies to further reduce the tax burden on iron ore enterprises. First, there is a need to deepen value-added tax reforms and decrease the value-added tax burden on iron ore enterprises. For instance, comparable to the real estate industry's value-added tax policy, iron ore enterprises could deduct items such as land costs, local compensation fees, land use taxes, and resource taxes from the value-added tax sales amount, thereby reducing the industry's tax burden and enhancing the competitiveness of iron ore enterprises. Second, there is a proposal to lower the resource tax on mineral products. The 60th announcement of the Standing Committee of the 13th People's Congress of Hebei Province decided to adjust the resource tax rate for iron concentrate from 3% to 4%, representing a 1% increase in the tax rate. Zhao Mingge recommends, "Maintain the original tax rate for iron ore beneficiation products based on value, which not only aligns with the national requirements for reducing fees and taxes but also helps improve the competitiveness of domestic iron ore enterprises." Third, it is suggested to refine the scope of resource tax collection to encourage iron ore enterprises to increase the level of resource reuse. After the implementation of the new resource tax law, resource taxes are levied on "mineral products extracted using low-grade ore, waste rock, and tailings recovery" and "building materials such as construction sand and gravel produced using tailings and waste rock." Zhao Mingge proposes, "Exempt resource taxes on mineral products extracted using low-grade ore, waste rock, tailings, etc., to increase the incentive for resource recovery by enterprises and avoid resource waste. At the same time, exempt resource taxes on building materials such as construction sand and gravel produced using tailings and waste rock, which fall within the category of iron ore waste; levying resource taxes on these products is not conducive to encouraging iron ore enterprises to increase the level of resource reuse.

Thirdly, to promote the healthy development of the industry, it is suggested to optimize the tax policies related to scrap steel. According to statistics, the domestic consumption of scrap steel reached 213.68 million tons in 2023. In domestic procurement, it is challenging to obtain invoices at the front end of the scrap steel recycling process, leading to issues with self-made certificates and purchase invoices in terms of compliance. Simultaneously, some enterprises take advantage of tax havens for invoicing, resulting in a separation of invoices and goods, leading to risks such as issuing false invoices. In practice, the tax risks in the front end of the scrap steel recycling process often result in significant losses for end-users.

To address this, Zhao Mingge proposes that relevant government departments, considering the actual situation of scrap steel procurement business, set a goal of "increasing the annual recycling volume of scrap steel by more than 10 million tons" and continuously coordinate the introduction and implementation of supporting policy measures.

"The key is to further clarify and differentiate the tax responsibilities of taxpayers engaged in scrap steel recycling, processing, and end-users (mainly steel enterprises). Especially for end-user steel enterprises involved in front-end business operations, the tax issues should not extend to end-user taxpayers when logistics, invoicing, and cash flow in scrap steel procurement are unified and taxed lawfully," emphasized Zhao Mingge to a reporter from China Metallurgical News.

He suggests, firstly, optimizing income tax-related policies by setting the income tax rate for scrap steel recycling enterprises at 0.5%, thereby reducing the tax burden on these enterprises. Secondly, optimizing value-added tax-related policies, increasing the value-added tax refund rate to 70% for qualified scrap steel processing enterprises; cracking down on behaviors such as using tax havens to issue false value-added tax invoices to lower the tax risk for enterprises. Thirdly, adopting multiple measures to expand the import of recycled steel raw materials, such as revising standards for recycled steel raw materials, relaxing impurity content requirements, providing value-added tax refunds or exemptions for imported recycled steel raw materials to reduce import costs, etc. Fourthly, incorporating scrap steel data statistics into national statistics.