Does the value-added tax reduction policy promote a firm’s green innovation? Evidence from China

Shiyu Lu and Bo Cheng

Applied Economics, 2024, vol. 56, issue 44, 5302-5317

Abstract: Based on the quasi-natural experiment of the Notice on Policies Related to the Simplified Value-added Tax Rate in 2017, this paper constructs a difference-in-difference model to shed light on the impact of the value-added tax reduction policy on a firm’s green innovation and its potential mechanism. The results reveal that after the implementation of the value-added tax reduction policy, the green innovation level of firms affected by the policy shock has significantly improved, and this conclusion remains consistent after a series of robustness tests. From the type of firms’ green innovation, the enforcement of the value-added tax reduction policy spurs firms’ substantive green innovation, but has limited impact on firms’ strategic green innovation. The mechanism test finds that easing financing constraints is an important channel for tax reduction policies to affect firms’ green innovation activities. In addition, the analysis indicates that the positive effect of the value-added tax reduction policy on green innovation is more pronounced among firms with more government innovation subsidies, stronger human capital, and higher capital intensity.

Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2023.2244253 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:56:y:2024:i:44:p:5302-5317

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2023.2244253

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().