Will Tax Burden Be a Stumbling Block to Carbon-Emission Reduction? Evidence from OECD Countries

Ren Yishuai (), Jiang Yong (), Ma Chaoqun (), Liu Jianglong () and Chen Jing ()
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Ren Yishuai: School of Public Administration, Hunan University, Changsha410082, China
Jiang Yong: School of Finance, Nanjing Audit University, Nanjing211815, China
Ma Chaoqun: Research Institute of Digital Society and Blockchain, Hunan University, Changsha410082, China
Liu Jianglong: Research Institute of Digital Society and Blockchain, Hunan University, Changsha410082, China
Chen Jing: College of Natural Sciences and Mathematics, The University of West Alabama, Livingston35470, USA

Journal of Systems Science and Information, 2021, vol. 9, issue 4, 335-355

Abstract: The influence of taxation on the economy and society is everywhere. Given the fact that CO2 emission is closely connected with human activities, the question naturally arises whether the tax burden affects the carbon emissions. To address this issue, based on the data of 21 OECD countries over the period from 1991–2014, we use the ratio of tax revenue to GDP as a proxy of the tax burden and employ a panel quantile model with the non-additive fixed effects for analysis. The results suggest that the impact of the tax burden on carbon emissions is heterogeneous across countries based on the level of carbon emissions. Moreover, we find a stable U-shaped relationship between the tax burden and carbon emissions whether for countries with a high or low level of carbon emissions. Our findings suggest that moderate taxes could help reduce carbon emissions, but the effect of excessive taxation is the opposite.

Keywords: tax burden; carbon emissions; panel quantiles; OECD countries (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jossai:v:9:y:2021:i:4:p:335-355:n:7

DOI: 10.21078/JSSI-2021-335-21

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