GTAP Resources: Resource Display
| GTAP Resource #6980 |
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"Uniform and differentiated environmental protection tax in China" by Hu, Xiurong Abstract China enacted the Environmental Protection Tax (EPT) Law at the beginning of 2018 to combat environmental issues like air pollution. There has been debate about whether environmental taxes should have a uniform or differentiated tax rate. China's current EPT adopts a differentiated tax rate, which stipulates that the tax rate is determined by each province. However, due to the absence of an optimal tax rate assessment, the tax rate is low in the majority of provinces, and it should be optimized. Based on a multi-regional computable general equilibrium model, this study first assesses the effect of varying sizes of uniform tax rates in each province from 2017 to 2030, then builds five tiers of differentiated tax rates, and finally compares the differentiated tax rates to the uniform tax rates. We find that a uniform tax rate is more effective in reducing emissions, while a differentiated tax rate does less harm to economic and social wellbeing. Furthermore, we find that transfer payments can diminish regional inequities in the distribution of emission reduction efficiency. We therefore propose either a differentiated tax rate for advantages to the economy and social wellbeing, or a uniform tax rate followed by interregional transfer payments to increase efficiency. |
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- Calibration and parameter estimation - Dynamic modeling - Environmental policies - Asia (East) |
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Last Modified: 9/15/2023 2:05:45 PM
