Research on the Carbon Emission Reduction Effect of Green Taxation under China’s Fiscal Decentralization

Abstract

Using the spatial Durbin model, this study investigates, systematically, the link between green taxes and carbon emissions and the influence of green taxation on carbon emissions under fiscal decentralization in the context of the shift in performance evaluation of the local government. The results demonstrate a positive correlation at different stages of the performance appraisal. Fiscal expenditure has dual effects on carbon emissions at different stages of environmental assessments. It additionally strengthens the positive effects of green taxation on carbon emissions, with improvements in economic development. Further analysis demonstrates an interaction between fiscal decentralization and environmental taxes and fees, effectively reducing carbon emissions. The interaction between fiscal decentralization and other green taxes, except the environmental bonded tax, has no significant impact on emissions. This study finally proposes a series of policy recommendations to reduce carbon dioxide from the perspective of reasonable green tax formulation and fiscal decentralization. These include: increasing environmental taxes, modifying present resource and environmental protection taxes, adopting new environmental taxes gradually, enhancing the current tax system, and enhancing the “greening” of tax income. In addition, this study proposes reforms to the performance evaluation method within the present fiscal decentralization framework.