The Impact of Environmental Tax and R&D Tax Incentives on Green Innovation

Qian Zheng, Jinye Li () and Xiaole Duan
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Qian Zheng: School of Economics and Management, Xinjiang University, Urumqi 830046, China
Jinye Li: School of Economics and Management, Xinjiang University, Urumqi 830046, China
Xiaole Duan: School of Accountancy, Xinjiang University of Finance and Economics, Urumqi 830012, China

Sustainability, 2023, vol. 15, issue 9, 1-18

Abstract: With the increasing severity of environmental threats, the role of governance in environmental protection is particularly important. This paper examines the policy effects of environmental regulation and its implementation and regulatory heterogeneity on green innovation from the perspective of a policy combination formed by demand–pull environmental taxes and supply–push R&D tax incentives, aiming to investigate the targeted effects of green innovation induced by regulatory policies in the tax environments of developing countries. Based on the data on China’s listed manufacturing enterprises from 2013 to 2021, this article uses the DID model to perform a fixed-effect test. The findings show that both environmental taxes and R&D tax incentives can promote the green innovation of enterprises, and their combination has a mutually reinforcing joint effect. Furthermore, an environmental tax can inhibit the strategic innovation problems of R&D tax incentives and improve the quality of green innovation. This paper also reveals that the tax enforcement environment positively affects the induction of green innovation from the perspective of policy implementation and supervision. Finally, the heterogeneity test examines the differences in the effects of policy implementation from the aspects of political association and whether manufacturing firm is a high-tech enterprise. The results of this paper provide a reference for improving the effectiveness of environmental regulatory policy portfolios from the aspects of pre-design optimization and post-implementation and supervision, enriching the evidence for the narrow Porter hypothesis in developing countries.

Keywords: environmental tax; R&D tax incentive; green innovation; tax enforcement environment (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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