Environmental taxation and regional inequality in China

Jingxu Wang, Jintai Lin, Kuishuang Feng, Peng Liu, Mingxi Du, Ruijing Ni, Lulu Chen, Hao Kong, Hongjian Weng, Mengyao Liu, Giovanni Baiocchi, Yu Zhao, Zhifu Mi, Jing Cao, Klaus Hubacek*

*Bijbehorende auteur voor dit werk

    OnderzoeksoutputAcademicpeer review

    16 Citaten (Scopus)


    In order to combat environmental pollution, China enacted the Environmental Protection Tax Law in early 2018. Yet the impacts of the environmental tax on individual regions with different socioeconomic statuses, which are crucial for social justice and public acceptance, remain unclear. Based on a Multi-Regional Input-Output (MRIO) Table and a nationally regulated tax payment calculation method, this study analyzes the distributional impacts of the environmental tax due to each province’s consumption from both inter-provincial and rural-urban aspects. The national tax revenue based on the current levy mechanism is estimated to be only one seventh of the economic loss from premature mortality caused by ambient particulate matter (PM2.5). The taxation may slightly alleviate urban-rural inequality but may not be helpful with reducing inter-provincial inequality. We further analyze two alternative levy mechanisms. If each province imposes taxes to products it consumes (rather than produces, as in the current mechanism), with the tax rate linearly dependent on its per capita consumption expenditure, this would moderately increase the national tax revenue and effectively reduce inter-provincial inequality. To better compensate for the economic cost of air pollution and reduce regional inequality, it would be beneficial to increase the tax rate nationwide and implement a levy mechanism based on provincially differentiated levels of consumption and economic status.
    Originele taal-2English
    Pagina's (van-tot)1691-1699
    TijdschriftScience Bulletin
    Nummer van het tijdschrift22
    Vroegere onlinedatum19-sep-2019
    StatusPublished - 30-nov-2019

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