Green tax system and corporate carbon emissions – a quasi-natural experiment based on the environmental protection tax law

Wei Xu and Mingzhu Li

Journal of Environmental Planning and Management, 2025, vol. 68, issue 9, 2092-2122

Abstract: The green tax system is an important tool for the government to coordinate the contradiction between economic development and environmental governance using fiscal instruments, and green tax reform can play a regulatory role in carbon emissions. This study analyzes the impact of the green tax system on carbon emissions of industrial enterprises by using the difference-in-differences model based on panel data for A-share listed industrial enterprises from 2014-2021 in China. The results show that: (1) Environmental Protection Tax Law significantly reduces corporate carbon emissions; (2) Among state-owned and heavy polluting industrial enterprises, enterprises with low financing constraints and a high degree of regional marketization, this negative effect is more pronounced; (3) Environmental Protection Tax Law motivates enterprises to implement carbon emission reduction activities through two paths: increased environmental protection investment and improved green innovation, thus promoting the transition to low-carbon development.

Date: 2025
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DOI: 10.1080/09640568.2024.2307524

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