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Fiscal Effects of Environmental Tax Reform: A Comparative Analysis of China, Germany and the United Kingdom

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  • Ye Chenghao
  • Igor A. Mayburov
  • Wang Ying

Abstract

This study aims to analyze the impact of environmental tax reforms on fiscal revenue. By conducting a comparative analysis of China, Germany, and the United Kingdom, the study explores the implementation effects and fiscal implications of environmental tax reforms in different countries. It selects a sum of eight taxes related to environmental protection in China for panel data on environmental tax revenue. These taxes include the urban maintenance and construction tax, vehicle purchase tax, urban land use tax, resource tax, environmental protection tax (known as the pollutant discharge fee before the 2018 reform), vehicle and vessel tax, ship tonnage tax, and tobacco tax. This selection is analyzed in comparison with environmental taxes in Germany and the United Kingdom, constructing a panel data of 30 observational samples from 2013 to 2022 on the total tax revenue growth rate and environmental tax revenue growth rate in the three countries for empirical analysis. Through linear regression and individual fixed effects model analysis, it was found that the fiscal effects of environmental tax reforms manifest as follows: there is unobservable heterogeneity in environmental taxes across different countries and significant fixed effects between countries. The growth rate of total tax revenue has a significant positive impact on the growth rate of environmental tax revenue. For every 1 percentage point increase in the growth rate of total tax revenue, China’s environmental tax revenue growth rate increases by approximately 0.8489 percentage points, with an average growth in environmental tax revenue of about 0.9797 percentage points. This provides a reference for China to achieve the goal of high-quality economic growth from the perspective of continuous reform and development of environmental taxes.

Suggested Citation

  • Ye Chenghao & Igor A. Mayburov & Wang Ying, 2024. "Fiscal Effects of Environmental Tax Reform: A Comparative Analysis of China, Germany and the United Kingdom," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 10(2), pages 258-270.
    • Handle: RePEc:aiy:jnljtr:v:10:y:2024:i:2:p:258-270
    DOI: https://doi.org/10.15826/jtr.2024.10.2.168
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    References listed on IDEAS

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    1. Chiroleu-Assouline, Mireille & Fodha, Mouez, 2014. "From regressive pollution taxes to progressive environmental tax reforms," European Economic Review, Elsevier, vol. 69(C), pages 126-142.
    2. Zhang, Jinzhu & Liu, Yu & Zhou, Meifang & Chen, Boyang & Liu, Yawen & Cheng, Baodong & Xue, Jinjun & Zhang, Wei, 2022. "Regulatory effect of improving environmental information disclosure under environmental tax in China: From the perspectives of temporal and industrial heterogeneity," Energy Policy, Elsevier, vol. 164(C).
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    Cited by:

    1. Ying Wang & Igor A. Mayburov, 2025. "Scenario-Based Forecasting of the Impact of Tax Incentives on Green R&D in China’s Wind Power Industry in a Complex Network Environment," Sustainability, MDPI, vol. 17(4), pages 1-33, February.

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    Keywords

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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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