How to Promote Low-Carbon Economic Development? A Comprehensive Assessment of Carbon Tax Policy in China

Weijiang Liu, Yangyang Li, Tingting Liu, Min Liu and Hai Wei
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Weijiang Liu: Center for Quantitative Economics, Jilin University, Changchun 130012, China
Yangyang Li: Business School, Jilin University, Changchun 130012, China
Tingting Liu: Business School, Jilin University, Changchun 130012, China
Min Liu: Business School, Jilin University, Changchun 130012, China
Hai Wei: School of Cyber Security, Gansu University of Political Science and Law, Lanzhou 730070, China

IJERPH, 2021, vol. 18, issue 20, 1-16

Abstract: Facing the increasingly severe environmental problems, the development of a green and sustainable low-carbon economy has become an international trend. In China, the core issue of low-carbon economic development is effectively resolving the contradiction between the exploitation and utilization of fossil energy and greenhouse gas emissions (mainly carbon emissions). Based on the SAM matrix, we established a static Computable General Equilibrium (CGE) model to simulate the impact of carbon tax policies on energy consumption, carbon emissions, and macroeconomics variables under 10, 20, and 30% emission reductions. Meanwhile, we analyze the impact of different carbon tax recycling mechanisms under the principle of tax neutrality. We find that the carbon tax effectively reduces carbon emissions, but it will negatively impact economic development and social welfare. A reasonable carbon tax recycling system based on the principle of tax neutrality can reduce the negative impact of carbon tax implementation. Among the four simulated scenarios of carbon tax cycle, the scenario of reducing residents’ personal income tax is most conducive to realizing the “double dividend” of carbon tax.

Keywords: carbon tax; low-carbon economy; CO 2 emissions; double dividend; CGE model; tax neutrality; carbon tax recycling system (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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