The Environmental Tax Scheme in China’s Large-Scale Pig Farming: Balancing Economic Burden and Responsibility

Abstract

China has implemented an environmental protection tax for large-scale agricultural farming to address environmental pollution caused by livestock and poultry breeding. Studying the environmental management of large-scale pig farming is crucial for controlling agricultural pollution. However, the economic impact and effectiveness of the current tax design, including responsibility sharing, tax rates, and taxpayers, are unclear. This study aims to address these gaps. Firstly, two types of taxation principles, production-based and consumption-based, are established, and their effects on pollution emissions distribution between pig production and marketing areas are comparatively analyzed. Secondly, the economic impact of consumption-based environmental taxes is estimated from inter-provincial and rural–urban perspectives under the current tax mechanism. Thirdly, a new alternative tax rate aligned with inter-provincial pig consumption levels is proposed based on the consumption principle. By comparing alternative tax systems, the potential impact of the current environmental tax on the regional economic burden is analyzed. The results highlighted that a production-based tax system resulted in 83% of regions experiencing varying degrees of implicit emission transfers, and a consumption-based tax system helped coordinate the environmental economic burden between pig production and marketing regions. Additionally, a linear relationship between tax rates and pork consumption expenditure not only alleviated the overall economic burden, leading to tax savings in 30% of regions, but also increased the national environmental revenue from the pig farming industry, resulting in a remarkable 147% rise in overall environmental tax revenue. These findings provide theoretical support for adjusting responsibility and economic burden through environmental tax modifications, facilitating the establishment of a compensation mechanism for the benefits between pig production and marketing areas.