Environmental Tax Rate Research Articles

Environmental Tax – Economic Growth Nexus in ASEAN-4 Countries

In the modern world, energy consumption, carbon emissions, and economic growth are concerns for all nations that want to continue expanding by striking a balance between energy and carbon emissions. One reason for this is that these fuels will cause global warming due to climate change. Environmental taxes are increasingly seen as a crucial component of economic policy, where a well-constructed tax can encourage innovation and economic incentives. The nexus of the economic growth and environment is now becoming one of the essential relations for policymakers. Nevertheless, most of the previous studies are limited to European countries. Thus, this research investigates the cointegration of Environmental Tax (ET) towards Economic Growth (EG) with Interest Rate (IR) as a control variable for the case of selected ASEAN countries, namely Malaysia, Philippines, Thailand, and Vietnam. The yearly data set covering the period from 2014 to 2021 was utilized as the sample period for the panel autoregressive distributed lag model (ARDL) approaches. Results revealed that both the Environmental Tax and Interest Rate have a long-run negative effect on Economic growth but have a positive influence in the short run. From this finding, the implication of environmental tax toward economic growth also may depend on the economic conditions of an economy.

МЕТОДОЛОГІЯ ВИЗНАЧЕННЯ РОЗМІРУ ЕКОЛОГІЧНОГО ПОДАТКУ ЗА ВИКИДИ В АТМОСФЕРНЕ ПОВІТРЯ ДВООКИСУ ВУГЛЕЦЮ

This article is devoted to current problems of environmental protection. Environmental taxes (payments) are the most effective tools that can be used to regulate relations between the state and polluters, as well as to stimulate polluting enterprises to ecologization their production. Objective. The purpose of the paper is to develop a methodological approach to determining the amount of the environmental tax for emissions of carbon dioxide into the atmosphere. Research methods. The purpose of the research is achieved with the help of general scientific methods (analysis of statistical data, synthesis, generalization) and special methods (collection of information, its processing, conducting analytical work, methods of calculations and justifications). The volumes of carbon dioxide emissions into the atmospheric air were analyzed. Among the methods of conducting analytical work, the comparison method was used - to compare the amount of the environmental tax determined by us for emissions of carbon dioxide into the atmosphere with similar environmental tax rates applied in the European Union. Obtained results. A methodological approach has been developed to determine the amount of the environmental tax for carbon dioxide emissions into the atmosphere. The amount of the environmental tax for carbon dioxide emissions into the atmospheric air is determined by the cost of forest ecosystem services for the absorption of carbon dioxide, the annual costs of enterprises for the ecologization of production, the volume of carbon dioxide emissions into the atmospheric air from stationary and mobile sources in Ukraine, the annual volume of carbon dioxide absorption by forest ecosystems from atmospheric air. Our research is complete and includes both an economic and an ecological component, which characterize the state of atmospheric air pollution with carbon dioxide. Using this methodology, we made calculations and obtained economically justified amounts of environmental tax. In terms of its economic significance, such an ecosystem payment is not a new tax and does not contradict the current legislation of Ukraine. Data for calculations are taken from the real economy in the environmental sphere. The amount of such an environmental tax, obtained on the basis of our methodology, correlates with the amounts of taxes for emissions of carbon dioxide into the atmospheric air, which are currently used in European countries. We received the economically justified amount of the appropriate environmental tax. It is thanks to real statistical data that our obtained indicators

What kind of environmental fiscal and taxation policies can support green production of ionic rare earths? A computable general equilibrium analysis

The Government of China has issued numerous environmental fiscal and taxation policies to promote the green production of ionic rare earths in mining and smelting processes, but the environmental situation near mining areas is still not auspicious. This study constructs a computable general equilibrium (CGE) model focusing on subsidies for cleaner production technology and environmental taxes for pollution among all current environmental fiscal and taxation policies. The objective of this paper is to evaluate and compare macroeconomic, environmental and industrial outcomes under twelve different scenarios to help the government choose the optimal policies. The results show that increasing the subsidy rate for cleaner production technology and increasing the environmental tax levy can both effectively reduce emissions but that increasing the environmental tax rate would have a negative impact on the macroeconomy and ionic rare earth production. If the subsidy rate and environmental tax levy are both raised to a certain level simultaneously, it would positively impact the macroeconomy, the environment and the production of ionic rare earths at the same time. Therefore, the Government of China should adjust the intensity of environmental fiscal and taxation policies for ionic rare earth mining and smelting and adopt a more appropriate policy combination to achieve optimal results at the comprehensive level.

The optimal choice of environmental tax revenue usage: Incentives for cleaner production or end-of-pipe treatment?

The environmental tax system is effective in pollution abatement. However, levying an environmental tax may be detrimental to economic growth. Reasonable use of environmental tax revenue may achieve both environmental protection and economic growth. This study proposes to earmark environmental tax revenue for pollution treatment. Taking fiscal expenditure theory into consideration, environmental tax revenue usage is divided into transfer expenditure and purchase expenditure. An environmental computable general equilibrium (CGE) model is established to evaluate the effects of environmental tax revenue usage. The optimal choice is to increase the environmental tax rate and simultaneously use tax revenue for cleaner production subsidies and end-of-pipe treatment expenditures. Under the optimal scenario, pollutant retention decreases by 21.45%, and GDP increases by 0.006%. For most regions in China, it is better to raise the environmental tax rate to the middle level of a specified range. Moreover, the government should distribute environmental tax revenue evenly across the expenditure of different environmental protection projects.

Environmental Taxation Assessment on Clean Technologies Reducing Carbon Emissions Cost-Effectively

Anthropogenic emissions increase the concentration of greenhouse gases, including carbon dioxide, which necessitates the promotion of environmental protection as one of the most urgent tasks of European environmental policy. The reduction of greenhouse gas emissions and the development of clean technologies in production also depends on the impact of environmental taxation; in this regard, a methodology for analyzing its impact and assessment on the development of eco-friendly technologies is proposed. An analysis of environmental tax revenues to the budgets of the EU countries revealed the insufficiency of environmental revenues to cover the costs of environmental protection from the damage caused by greenhouse gas emissions, which requires the transformation of the system of fiscal mechanisms. The total receipts of all environmental taxes in the EU budget for the period 2000–2020 increased by 53%, and the receipts from taxes on greenhouse gas emissions into the atmosphere increased by 71% in the EU budget, with a tax rate increase of 1.5-fold over this period. The application of the proposed methodology made it possible to determine, on the basis of the correlation coefficient, a high connection strength of +0.971 for the period 2000–2020 between the receipts of the environmental tax for greenhouse gas emissions into the atmosphere and the total values of all environmental taxes, as well as a fairly strong feedback of +0.913 from the receipts of the environmental tax to the EU budget with gross domestic product. Therefore, it is proposed to use differentiated environmental tax rates for different stages of the development of clean technologies.

Fossil Fuel and Biofuel Boilers in Ukraine: Trends of Changes in Levelized Cost of Heat

An increase in the share of renewables in heat supply systems is a promising direction to reach sustainable development goals and decarbonization. Decision makers should consider various factors, including energy market prices, the availability of biofuels, boiler and auxiliary equipment costs, logistic costs, and the taxation system. In the European Union, the energy crisis causes a rapid increase in fossil fuel prices. Moreover, the use of fossil fuels results in greenhouse gas emissions, which threatens the achievement of sustainable development goals. We studied the influence of the delivery cost and the value of environmental tax rates on the levelized cost of heat. Low-capacity boilers (up to 1 MW) and different fossil and renewable fuels were analyzed. An analysis was carried out on the example of Ukraine. The European trends were factored in. The obtained results showed that biofuel boilers had lower levelized costs of heat than fossil fuel boilers. Delivery costs and environmental taxes have a significant impact on heat energy costs.

The distributional effects of China’senvironmental taxation: A multi-regional analysis

Environmental taxation is regarded as an effective tool to improve air quality in China, but its distributional effects causing serious disparity among multi-groups and multi-regions are understudied. Here this paper constructs a multi-regional dynamic recursive computable general equilibrium (CGE) model to explore the distributional effects of China's environmental taxation among different income groups and regions, by specifying the elasticity parameters of urban households' consumption in the model, and combining with various micro-data such as household survey data and environmental statistics database. This paper simulates the air pollution reductions of China's environmental taxation, and the impacts on the income and expenditure of households with various environmental tax rates or manners of tax revenue recycling. Results have shown that China's environmental taxation will widen the gap between different income groups and different regions. Also, such adverse distributional effects will be increased by higher environmental tax rates. However, recycling environmental tax revenues to both households and enterprises can reduce the losses of households' income and consumption. Yet recycling revenues to enterprises is more effective in narrowing the gap between income groups and regions while improving regional economic development. Our findings may pave a way to design appropriate environmental tax rates and tax revenue recycling manners for China's future environmental tax policies at the regional level.

The impact of environmental taxes on economic benefits and technology innovation input of heavily polluting industries in China

This paper defined heavily polluting enterprises as the treatment group based on relevant data on the listed companies in the 5 years from 2016 to 2020. Companies other than the heavily polluting enterprises were defined as the control group. An empirical analysis applying the double-difference technique was performed to assess the impact of China’s environmental tax on the economic performance and technological innovation input of industries that pollute heavily. The findings demonstrated an increased positive effects of environmental taxes on the economic performance and technology innovation input of heavily polluting industries since the inception of the environmental tax in China. As some enterprises in heavily polluting industries are under increased financial pressure owing to green upgrades and the low environmental tax rate in some regions, recommendations are presented to improve the environmental regulation system, adapt environmental taxes to local conditions, and strengthen the implementation and supervision of environmental taxes through big data technology.

Exploring the Impact and Path of Environmental Protection Tax on Different Air Pollutant Emissions.

Existing studies have examined the double dividend effect of environmental protection tax. However, less attention has been paid to the influencing factors and transmission paths of the pollution abatement effect of the environmental protection tax. Based on the panel data for 30 of China’s provinces from 2007 to 2019, this study discusses the environmental protection tax’s influencing factors and transmission paths on the emission scale and intensity of different air pollutants through the panel threshold regression model and mediating effect model. The results show that: (1) the environmental protection tax has a positive emission reduction effect on the emission scale or emission intensity of sulfur dioxide (SO2) and nitrogen oxides (NO2); (2) the abatement effect is stronger when per capita gross regional product is above the threshold value; (3) technological progress, economic growth, and industrial structure all have positive mediating effects. Therefore, the local environmental protection tax rate should be set with comprehensive consideration of regional economic development, industrial structure, and technological progress.

Can environmental tax curb air pollution: evidence from China

ABSTRACT Using the environmental tax reform implemented in 2018 in China as a quasi-experiment, this paper employs PSM, DID, and DDD methods to investigate the causal impact of environmental tax on air pollution. Viewing those provinces that choose to set a higher tax rate than the original pollution fee rate as the treatment group and provinces that do not increase the tax rate as the control group, this paper provides robust evidence that the environmental tax reform is effective in reducing PM2.5 and SO2 concentration level, while the effect is smaller and inconsistent for NO2. A back-of-the-envelope welfare analysis suggests that a 1-unit increase in the environmental tax rate is associated with a reduction of 5,616 in total deaths and a welfare gain of $28.256 billion in 2005 USD for all Chinese households.

Re-evaluating environmental tax: An intergenerational perspective on health, education and retirement

The impact of air pollution on individuals involves issues relating to medical care, education, pensions and retirement. As such, environmental policy can influence the intra- and intergenerational decision-making behaviour of individuals. In this paper, we re-evaluated environmental tax from an intergenerational perspective, using a three-period overlapping generation dynamic general equilibrium (OLG-DGE) model that incorporates health, education and retirement. Our paper highlights the importance of the interaction between economic growth, environmental pollution and intergenerational decision-making behaviour in three respects: (1) With increases to the environmental tax rate, the dynamic pattern of economic levels follows the ‘descending-ascending-descending’ trend. There is an optimal range of environmental tax rates in which double dividends are achieved, thus breaking the pollution-growth-pollution cycle. (2) An environmental tax changes the intra- and intergenerational optimal behaviour of individuals in terms of influencing health risks, retirements, education time and savings behaviour. It increases the efficiency of the intergenerational allocation of resources and, thus, improves the lifetime welfare of individuals. (3) In the face of technological progress, an environmental tax can amplify the expansionary effects of the economy, strengthen the pro-cyclicality of precautionary health investment and weaken the counter-cyclicality of education time.

Multi-objective optimization of environmental tax for mitigating air pollution and greenhouse gas

Government macro-control through various policies is an important way to mitigate air pollution and greenhouse gases. Therefore, environmental tax is used worldwide as an important measure. However, few studies have considered the interaction between carbon and environmental protection taxes. Additionally, different sectors differ in their energy structure, pollution emission intensity, and economic status, and previous studies rarely proposed differentiated environmental tax rates based at the sectoral level. A model framework combining the computable general equilibrium (CGE) model and Bayesian optimization (BO) algorithm is proposed to maximize GDP, meet environmental planning objectives, and explore the optimal environmental taxation scheme to realize the multi-objective optimization of the economy and environment. Meanwhile, this study compares the different impact mechanisms of environmental protection tax and carbon tax. It discusses the impacts of differentiated environmental tax rates in different sectors on the environment and economy. For example, the results show that the coordinated implementation of environmental protection and carbon tax policies and the sectoral differentiated environmental tax rates in China could better balance economic development and environmental governance. Additionally, the optimal taxation scheme could mitigate air pollution and greenhouse gases, promote economic growth, and realize sustainable economic and environmental development. Furthermore, the optimized taxation scheme positively affects the energy and industrial structures.

Environmental taxes, technology innovation quality and firm performance in China—A test of effects based on the Porter hypothesis

China’s environmental tax aims to encourage technological innovation and achieve a win–win situation between the economy and the environment. Based on the panel data of A-share listed enterprises in heavy polluting industries in China from 2011 to 2019, this paper empirically examines how environmental taxes affect the development of heavy polluting enterprises. The main results are as follows: (i) Environmental taxes increase innovation and bring economic benefits to innovative enterprises, and thus, the “strong version” of the Porter hypothesis is validated. (ii) The effect on the quality of innovation is heterogeneous across tax regions. Specifically, a high environmental tax rate is more conducive to the improvement of innovation quality, and the intermediary effect of innovation quality is significant only in high tax rate regions. Further research finds that other environmental policies, such as environmental subsidies and R&D subsidies, play an important role in improving the quality of technological innovation. Well-designed policy combinations can correct the “distortion” of innovation that results from environmental taxes. A series of recommendations are proposed to improve the overall effect of environmental tax strategies.

Environmental Taxes Impact for the Population Health Protection: Cross-Country Analysis

The current demographic situation in the world encourages the search and implementation of optimal tools for stabilizing the population’s life expectancy and ensuring their health. The study was designed to investigate the impact of environmental taxes, as environmental policy instruments, on the state and the health of the population. The analysis of scientific works, built based on the Publish or Perish software, made it possible to confirm the unfailing relevance of research on the topic of the impact of environmental taxes. Where environmental taxes are considered as a tool for influencing the level of pollution of the surrounding natural Environment and indicators of life and health of the population. The analysis of scientific works published in recent years under the keywords «environmental tax» and «healthy» based on the Scopus scientometric database also confirmed the study’s relevance, considering the level of citations of the presented works. Some authors pay considerable attention to additional taxation of producers of harmful products and subsidizing enterprises that grow or produce eco-products. Other scientists emphasize changing the existing environmental legislation (increasing environmental tax rates, targeted use, introducing additional critical emission limits, etc.). They believe this will have the effect of a hidden intervention in the prevention of disease through reducing climate change. The main part of the study was based on visual confirmation of the relationship between environmental taxes and the population’s level of health using the VOSviewer software product. This bibliometric analysis confirmed that limiting the environmental pollution level due to environmental taxes determines the possibility of improving the population’s health. At the same time, financial instruments for curbing habits harmful to human health also have a positive impact. Clustering made it possible to: confirm the impact of environmental taxes on the actual level of environmental pollution; reflect the dependence of personal habits and tendencies that affect the life and health of the population; to argue the fact that ecological culture and the culture of a healthy lifestyle are formed not only by objective but also by subjective reasons, as well as by the general psychological state of the population; to confirm the existence of the socio-regulatory orientation of the ecological tax, including the environmental exposure and the level of health of the people, etc. The graphical method (built based on Stata software) made it possible to confirm that environmental taxation can improve the state of the natural environment. The transmission nature of environmental taxation’s impact on the population’s life and health is also determined. The research results are a scientific basis for developing the latest environmental policy, which would fully enable the environmental tax to perform its compensatory function, as well as ensure the formation of green production and expand the access of individuals to quality food products.

Вплив адміністрування екологічного податку на вартість теплової енергії в Україні

The article provides an overview of approaches to greenhouse gas emissions taxation and tax rates in European countries. To compare heated boilers with different characteristics, which run on different fuels the average cost of thermal energy for the life cycle LCOH was used. Environmental tax on environmental pollution (as a component of LCOH) is calculated for the three most common types of boilers in Ukrainian boilers with a capacity of 4.65 to 58 MW, burning natural gas, coal, and fuel oil, as well as for low-power boilers (0.5 and 1 MW ), burning fossil fuels and biofuels. The eco-tax for biofuel boilers is calculated under current taxation and subject to the adoption of a European approach to taxation of carbon dioxide emissions. It is established that at the current rates there are almost no economic incentives for the introduction of technologies to reduce the concentration of pollutants in emissions, but increasing the rates of environmental tax may change this situation. However, provided that rates are evenly increased for all types of boilers, the eco-tax for natural gas boilers will remain the lowest, while for biofuel boilers it will increase significantly, which contradicts the stated goal of decarbonizing the economy. It is shown that not only the change of environmental tax rates can be an effective tool for achieving the goals of sustainable development, as the principles of its administration are also important.

Environmental regulation policy, corporate pollution control and economic growth effect: Evidence from China

This paper constructs a theoretical framework including pollution accumulation that describes the corporate pollution treatment mechanism, and uses the shooting method to find the equilibrium solution on saddle path of the neoclassical model. It simulates the effects of pollution reduction and economic growth under the three scenarios of “no environmental regulation policy”, “with environmental tax policy”, and “with a combination of environmental tax policy and subsidy policy for pollution control”. The results show that in the absence of any environmental regulation policy, firms will not incorporate the social cost of pollution emissions into their own production cost and have no incentive for pollution control. When implementing environmental tax policy, firms will be motivated to invest more into pollution control because the cost of penalties on firms rapidly increases as environmental tax rate rises and the negative impact of pollution on business production continues to deepen, and the marginal return on energy input begins to fall. Compared with sole implementing environmental tax policy only, a combination of environmental tax policy and subsidy policy for pollution control can further stimulate firms’ incentives, which achieves a virtuous cycle between output growth, pollution reduction and corporate treatment, reaching effects of pollution reduction and economic growth.

An evolutionary analysis of corruption in the process of collecting environmental tax in China.

Considering the bargaining power of enterprises, this paper distinguishes between "Offering Bribes Voluntarily" (OBV) and "Offering Bribes under Pressure from Environmental Inspectors" (NOBV). An evolutionary game model between environmental inspectors and enterprises is constructed to study the corruption of environmental inspectors in the process of environmental tax collection under the system of upward accountability. At the same time, numerical simulations are carried out using China's pollution discharge data and pollution discharge fee collection standards in 2017. The results show that when enterprises have different bargaining powers, there are differences in the evolutionary stable strategy (ESS) in the process of environmental tax collection. Enterprises with weak bargaining power may adopt "OBV" strategy. Under the system of upward accountability, it is difficult for the public to form adequate supervision over polluting enterprises and environmental inspectors. Only with the power of the upper-level government can the public's supervisory role be brought into play. High audit costs and environmental tax rates may be objective incentives for environmental inspectors' corruption and enterprises' bribery.

Environmental Taxation and Import Demand for Environmental Goods: Theory and Evidence from the European Union

In this paper, we study the impact of environmental taxation on trade in environmental goods (EGs). Using a trade model in which demand for and supply of EGs are endogenous, we show that the relationship between environmental taxation and demand for EGs follows a bell-shaped curve. Above a cutoff tax rate, a higher tax rate can reduce bilateral trade in EGs because there are too many low-productivity EG suppliers. Based on trade data from 1995 to 2012 across the EU-27 countries, our empirical results are in accordance with the predictions of our model when we use the Asia-Pacific Economic Cooperation (APEC) list of EGs. We find that environmental taxation (measured as the ratio of environmental tax revenoe to GDP) has a monotonically positive impact on the number of trading partners. Furthermore, we show that if countries were to apply an environmental tax rate equal to $$3.96\%$$ (e.g., the tax rate maximizing international trade in EGs), then trade in EGs across the EU-27 members would experience an increase of 25.33 percentage points. The results are mixed when we analyse the EGs on the OECD list. While the results for the the number of trading partners are confirmed when we use this list, there is no effect of environmental taxation on import demand.

Prospect theory in an evolutionary game: Construction of watershed ecological compensation system in Taihu Lake Basin

As an important system to solve cross regional water pollution, watershed ecological compensation has been widely used in the world. However, the existing studies mainly focus on the governments, while ignoring the important role of polluting enterprises in watershed ecological compensation. Thus, the established watershed ecological compensation mechanism is difficult to implement sustainably. Therefore, taking the local governments and polluting enterprises in the watershed as the research object, and studying the change process and influencing factors of their decision-making behavior is of great significance to attract polluting enterprises to join the watershed ecological compensation, and to formulate a sustainable watershed ecological compensation mechanism to solve the cross regional water pollution. Therefore, based on prospect theory and evolutionary game theory, this paper firstly establishes an evolutionary game model between local governments and polluting enterprises in Taihu Lake Basin; secondly, combined with simulation technology, their decision-making behaviors and influencing factors of watershed ecological compensation are studied. The results show that: (1) The initial probabilities will affect their decision-making behaviors; (2) The ecological compensation fee has little influence on the decision-making behaviors of polluting enterprises; (3) The increase of environmental tax rate has significant influence on the local governments’ decision-making behaviors with low initial probabilities; (4) The improvement of supervision ability can promote local governments and polluting enterprises to reach a stable state faster; (5) The marginal decreasing degree of value function has a stronger influence on local governments than on polluting enterprises. This paper can provide suggestions for local governments to build a sustainable watershed ecological compensation mechanism including polluting enterprises, and provide the scientific basis for decision-makers of polluting enterprises whether to join watershed ecological compensation. • The players will follow the prospect theory to make decisions in the short term, but the expectation theory in the long term. • Initial probabilities will affect decision-making behaviors of players. • Ecological compensation fee has little influence on polluting enterprises. • In the low probabilities, environmental tax rate has significant influence on the local government. • Marginal decreasing degree of value function has a stronger influence on local governments than on polluting enterprises.

The influence of environmental tax rates on the Levelized cost of heat on the example of organic and biofuels boilers in Ukraine

In December 2019, the European Commission officially presented The European Green Deal, a new EU economic development program aimed at achieving climate neutrality on the European continent by 2050. Many previous global, European, and national programs also aim to reduce emissions of pollutants into the atmosphere. In this context, one of the ways to reduce emissions is the development of alternative energy sources (in particular the wider use of biofuel boilers) and increasing environmental tax rates. When choosing the optimal heating boilers, the practice of using the levelized cost of heating (LCOH) indicator is common. Environmental pollution tax (as a component of LCOH) is calculated for the three most common types of boilers (for Ukrainian boiler houses) with a capacity of 4.65 to 58 MW, burning natural gas, coal, and fuel oil, as well as low-power boilers burning organic and biofuels, for existing environmental tax rates, for projected increasing in 4 times (according to the bill) and subject to the introduction of minimum and maximum rates in EU countries. It is established that at the current environmental tax rates in Ukraine there are almost no economic incentives for the introduction of technologies to reduce the concentration of pollutants in emissions, but increasing environmental tax rates may change this situation. This, in turn, once again suggests that changing environmental tax rates can be an effective tool for achieving sustainable development goals.