Environmental protection tax and total factor productivity—Evidence from Chinese listed companies

Abstract

By improving its total factor productivity, China may attain higher quality and more sustainable economic growth. As a key market-based incentive for environmental regulation, does environmental protection tax increase total factor productivity and provide a win-win situation for both economic and environmental performance? It is a debate-worthy topic. Based on data of Chinese listed companies, this paper uses the triple difference method to analyze China’s environmental protection tax reform as a natural experiment. The results show that the environmental protection tax can significantly boost the firm’s total factor productivity by encouraging technological innovation and enhancing resource allocation. Based on analysis of heterogeneity, it appears that state-owned enterprises, larger corporations, and regions with more strict environmental enforcement are more responsive to environmental protection tax policies. This report provides critical empirical evidence for upgrading China’s tax framework to protect the environment.

Environmental Protection Tax and Green Innovation: The Mediating Role of Digitalization and ESG

“…The coefficients of EPT and GI are significant, indicating that GI has a partial mediating role in the effects of EPT on TFP. This result is similar to that of [81]. The increase in GI leads to a significant increase in TFP.…”

“…Pollution charges compel firms to no longer discharge pollutants at will, and EPT increases the tax burden and environmental management costs of firms. According to the Porter hypothesis, appropriate EPT can realize the "innovation compensation effect" and urge firms to carry out technological innovation to reduce production costs and improve production efficiency [81]. The following question discussed is whether EPT can further facilitate the compensation effect of GI, thereby improving firms' TFP.…”

The Interaction Between the Implementation of Environmental Policy and the Sustainable Development of Financial Market

“…The key research object of Wang Chao et.al is the total factor productivity (TFP) of enterprises, which explores the development of heavy polluting industries after the implementation of the Environmental Protection Tax Law(EPTL) in 2018 [3]. Overall, EPTL increased the TFP of heavily polluting enterprises by 3.4%, and the results confirmed the "Porter effect" in the context of China.…”

The Impact of Environmental Protection Tax Policy on the Financial Performance of Heavy Pollution Enterprises

“…As the EPT makes the sewage cost of some enterprises higher than the period of sewage charges, resulting in a decline in corporate income under the same conditions, in order to restore or improve the level of income, enterprises need to increase profitability and competitiveness by improving production efficiency or reducing unit costs, which is beneficial to the FP of enterprises in the long run (Kong et al 2023;Lei et al 2023;Liu 2023;Ma & Cui 2023;Rao et al 2023). Second, the regulatory role of EPT incentivizes firms to innovate clean technologies or green products to reduce emissions costs and capture market opportunities (Su et al 2023;Sun & Zhang 2023;Xu et al 2023;Yan et al 2023). Environmental protection costs make enterprises pay attention to clean technology and use new technology to reduce pollution emissions in the production process, thus reducing costs, which is favourable to FP; enterprises research and development and production of green products to meet consumer demand, which helps to seize market share and improve corporate profitability, which in turn has a positive impact on FP (Zhao et al 2023).…”