Economics at your fingertips  

Fiscal Incentives and Environmental Infrastructure in China

Antung Anthony Liu () and Junjie Zhang ()
Additional contact information
Antung Anthony Liu: Resources for the Future

RFF Working Paper Series from Resources for the Future

Abstract: This paper provides evidence that China's system of tax revenue sharing is an important explanation for differences in the rate of sewage treatment plant construction among its cities. As a result of the 1994 tax reform, Chinese cities retained different shares of their value-added tax (VAT). Exploiting the persistence of this sharing system, we use the VAT share in 1995 as an instrument for the present fiscal incentives. We find that a 10 percentage point increase in the VAT sharing rate resulted in a 13.8 percent increase in the construction of sewage treatment capacity. This result suggests that fiscal incentives can play an important role in the provision of pollution-reducing infrastructure.

Keywords: sewage; water pollution; China pollution; fiscal federalism; tax sharing; tax federalism; China VAT sharing (search for similar items in EconPapers)
JEL-codes: H4 H54 H77 Q53 Q56 (search for similar items in EconPapers)
Date: 2012-09-21
New Economics Papers: this item is included in nep-acc, nep-env, nep-pbe, nep-res, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc

Downloads: (external link) (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found ( [301 Moved Permanently]-->

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:

Access Statistics for this paper

More papers in RFF Working Paper Series from Resources for the Future Contact information at EDIRC.
Bibliographic data for series maintained by Resources for the Future ().

Page updated 2024-04-08
Handle: RePEc:rff:dpaper:dp-12-36