The Impact of Environmental Tax Reform on Total Factor Productivity of Heavy-Polluting Firms Based on a Dual Perspective of Technological Innovation and Capital Allocation

Abstract

As an essential reform of China’s environmental regulatory policy, the environmental protection tax reform achieves a smooth transition from the emission fee system to the environmental protection tax system according to the principle of tax burden leveling. With the quasi-natural experiment of the introduction of the Environmental Protection Tax Law, this paper examines the effect of environmental protection tax reform on total factor productivity of heavily polluting firms using a difference-in-difference approach based on empirical evidence of Chinese listed companies from 2015 to 2020. It is found that environmental tax reform can significantly increase the level of total factor productivity of heavily polluting firms, and the results remain robust to robustness tests using the OP method, the GMM method to re-measure the total factor productivity of heavily polluting enterprises and the use of different industry classification criteria, with the mechanism of action mainly coming from the technological innovation effect and capital allocation optimization. In addition, the effect of environmental tax reform on total factor productivity of heavily polluting firms is heterogeneous across regions and industries, with the total factor productivity of firms in heavily polluting industries in the eastern region being least affected by environmental tax policies and state-owned enterprises with heavy property rights structures being most affected by environmental tax reform.

The Impact of Carbon Emission Trading Policy on Enterprise ESG Performance: Evidence from China

“…The Environmental Protection Tax Law of the People's Republic of China entered into force in January 2018. The environmental protection tax system began to be implemented as the enterprise pollution payment system was changed from an emission fee to a tax for environmental protection [73]. Since environmental protection tax reform will affect the ESG performance of enterprises, we exclude the data after 2018 and perform regression analyses on the samples.…”

Environmental Fiscal Reform and the Challenge of the Oil Palm. Towards Sustainable Production

“…Siguiendo la premisa de que "quien contamina asume los costos" [24], [27], [28]. Sin embargo, según [29] la RFA también se ha vuelto cada vez más atractiva para los reguladores de países en desarrollo como China, Tailandia, Chile y México, debido a su capacidad para abordar las externalidades ambientales, aumentar los ingresos, proyectar la viabilidad a largo plazo de la ecología natural y significativamente el nivel de productividad total de los factores de las empresas altamente contaminantes [30], [31]. Alineado a lo anterior, para América Latina, sobresalen las reformas tributarias de países como Argentina ( 2013 (2007,2012,2013) y Colombia (1998), con aportes en materia fiscal enfocadas a impuesto a automóviles y motocicletas de alta gama, embarcaciones y aeronaves deportivas, impuesto sobre los productos industrializados, impuesto sobre el carbono, entre otros.…”

“…Las temáticas Environmental Tax con 41 ocurrencias, seguida de Tax Reform (33), Environmental Econmics (30), Taxation (26) y Environmental Tax Reform (23), reflejan la Frecuencia de las palabras a lo largo del tiempo entre los años 1998 y 2023, con tendencia ascendente entre las temáticas, como se observa en la Figura 10. El análisis de la estructura conceptual en la Figura 11, presenta en el cuadrante de Temas Emergentes la conformación de 2 clusters que contienen las keywords property rights, laws and legislation y natural resources, con una ocurrencia igual a 2.…”