Is environmental tax legislation effective for pollution abatement in emerging economies? Evidence from China

Abstract

This study estimates the effect of environmental tax legislation on air pollution, using the implementation of China’s Environmental Protection Tax Law (EPTL) as a quasi-natural experiment. For cities which have been authorized to raise tax rates by the EPTL, the air quality index (AQI) is 2.36 lower after the reform. The effect is reinforced in cities with stricter tax enforcement, lower fiscal stress, as well as higher initial pollution levels. Heterogeneity analyses show that the reform is more effective in cities with lower levels of marketization and legalization, as well as in developed cities. In addition, the impact of the reform is more significant in cities with higher levels of public participation in environmental governance, higher tax competition levels, and higher share of secondary industry. A series of robustness tests corroborates the results. This paper provides evidence that environmental tax legislation is efficacious in pollution abatement for developing economies.

Study on the Impact of Environmental Tax on Corporate Green Innovation under the Dual Carbon Target based on A-Share Mining Listed Companies

“…( 2 ) Most scholars focus on the theoretical research of environmental protection tax, the " double dividend " effect or the impact of environmental regulation on corporate green technology innovation, and there are few studies on the direct use of environmental protection tax and corporate technological innovation. [2] ( 3 ) Existing studies on the influencing factors of corporate green innovation mainly include environmental regulations, government supervision, upstream and downstream factors, internal factors, etc., and less attention has been paid to the impact of environmental protection tax on corporate green innovation. As an economic incentive environmental regulatory tool, environmental protection tax is significantly different from other environmental regulatory tools.…”