Abstract
In recent years, the accumulated environmental problems resulting from excessive usage of fossil fuels have gradually loomed. Thus, an environmental tax, as an important policy tool, has been put on the agenda in China. In this paper, a dynamic recursive multi-sector Computable General Equilibrium (CGE) model is applied to explore the impacts of the environmental tax on China’s economy. To comprehensively analyze the impacts, we introduce four kinds of typical contaminants and set two kinds of scenarios: different tax rates and different tax refunds. The results show that the environmental tax is conducive to environmental improvement, but the economic variables are adversely affected, for example, the loss of GDP at the low level tax rate is 0.46%. In order to offset the negative impacts, we presume the government refunds the tax. The results show that this can indeed relieve the negative effects. When the government refunds the production tax and corporate income tax, 0.49% and 0.34% of GDP is relieved by respectively. This paper provides a comprehensive analysis of the implementation of the environmental tax in China and lays a solid foundation for the introduction of the environmental tax.
Highlights
The Chinese people are proud of the rapid development of the economy, the fact of China’s heavy reliance on fossil fuels causes severe environmental problems and health problems for dwellers.Carbon dioxide, sulfur dioxide, nitrogen oxide and carbonic oxide are the main atmospheric pollutants that currently affect Chinese air quality, and can have important effects on the global climate and human health [1]
The Simulation Results of Different Tax Rates. This part shows the results of the different tax ratea, including the impacts of the environmental tax on the macroeconomic variables and the impacts at the industry level
The Simulation Results of Different Tax Refund. This part shows the results of different tax refunds, including the impacts of the environmental tax on the macroeconomic variables and the impacts on industry levels
Summary
Sulfur dioxide, nitrogen oxide and carbonic oxide are the main atmospheric pollutants that currently affect Chinese air quality, and can have important effects on the global climate and human health [1]. All these atmospheric pollutants mainly come from the usage of fossil energy. Mounting pressure from the international community requires that a series of emission reduction targets and emission mitigation policies should be implemented by the Chinese government. In the context of pursuing climate policy targets for 2020
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