The Impacts of Environmental Tax in China: A Dynamic Recursive Multi-Sector CGE Model

Abstract

Abstract:In recent years, the accumulated environmental problems resulting from excessive usage of fossil fuels have gradually loomed. Thus, an environmental tax, as an important policy tool, has been put on the agenda in China. In this paper, a dynamic recursive multi-sector Computable General Equilibrium (CGE) model is applied to explore the impacts of the environmental tax on China's economy. To comprehensively analyze the impacts, we introduce four kinds of typical contaminants and set two kinds of scenarios: different tax rates and different tax refunds. The results show that the environmental tax is conducive to environmental improvement, but the economic variables are adversely affected, for example, the loss of GDP at the low level tax rate is 0.46%. In order to offset the negative impacts, we presume the government refunds the tax. The results show that this can indeed relieve the negative effects. When the government refunds the production tax and corporate income tax, 0.49% and 0.34% of GDP is relieved by respectively. This paper provides a comprehensive analysis of the implementation of the environmental tax in China and lays a solid foundation for the introduction of the environmental tax.

Valuation Impacts of Environmental Protection Taxes and Regulatory Costs in Heavy-Polluting Industries

“…In addition, the environmental improvement information, in particular symbolic disclosure using a narrative language helps to relieve the market's concern with increasing future regulatory costs. Consistent with the Environmental Protection Tax Law (i.e., the first green tax law) in China focused on discouraging and reducing environmental pollution [55], it appears that the market finds stronger regional legal institutions and prior environmental improvement activities to be valuable through reducing the uncertainty of future regulatory costs in the era of sustainable development.…”

Climate Policies Under Dynamic International Economic Cycles: A Heterogeneous Countries DSGE Model

“…With regards to the economic part of the model, we estimate the parameters of production structure in China and the EU using GTAP database. With regards to the climate-related parameters, we refer to integrated assessment models, for instance, we estimate the marginal abatement costs by our CGE models (Xiao et al, 2015;Xiao et al, 2017). Table 1 shows the specific source and estimation method of those parameters.…”

Optimization Model of an Efficient Collaborative Power Dispatching System for Carbon Emissions Trading in China

“…On the specific implementation of the trading system, there are many researchers focusing on the different quota allocation mechanisms, discussing the setting of carbon price and the free quota. At the same time, the government will also introduce some detailed measures [7][8][9]. CETS is important for power generation dispatching; it may affect the sequence and efficiency of power generation, and subsequently have an impact on the strategic choice of power plants.…”