Can Environmental Protection Tax Promote Urban Green Transformation? Experimental Evidence from China

Zhankun Qi, Feng Long (), Fenfen Bi, Xue Tian, Ziwei Qian, Xianming Duan and Chazhong Ge
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Zhankun Qi: School of Management, Hangzhou Dianzi University, Hangzhou 310036, China
Feng Long: The Center for Environmental Tax, Chinese Academy of Environmental Planning, Beijing 100041, China
Fenfen Bi: The Center for Environmental Tax, Chinese Academy of Environmental Planning, Beijing 100041, China
Xue Tian: The Center for Environmental Tax, Chinese Academy of Environmental Planning, Beijing 100041, China
Ziwei Qian: School of Management, Hangzhou Dianzi University, Hangzhou 310036, China
Xianming Duan: School of Management, Hangzhou Dianzi University, Hangzhou 310036, China
Chazhong Ge: The Center for Environmental Tax, Chinese Academy of Environmental Planning, Beijing 100041, China

Sustainability, 2024, vol. 16, issue 20, 1-17

Abstract: As one of China’s important environmental and economic policies, the environmental protection tax (EPT) is important in promoting economic and social green transformation. In this study, the green total factor productivity (GTFP) of 283 prefecture-level cities in China from 2013 to 2022 was calculated using a Super Slack-Based Model (Super-SBM) and the Malmquist-Luenberger (ML) index, which includes undesirable outputs. Moreover, the implementation effect of environmental tax on promoting urban green transformation is identified through the difference-in-differences (DID) model. This study revealed that (1) an EPT can significantly increase the GTFP of a city and promote its green transformation. (2) Industrial structure optimization and technological innovation are important mechanisms through which EPT drives urban green transformation. (3) The implementation effect of EPT in promoting urban green transformation presents significant policy differences across geographic locations, whether cities are key environmental protection cities or types of resource-based cities. EPT can significantly promote the green transformation of local cities, which in turn can positively affect the green transformation of neighboring cities. Based on this study’s conclusions, suggestions are put forward to improve the EPT system to promote urban green transformation.

Keywords: environmental protection tax; DID; GTFP; green transformation; spatial durbin model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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