Digital fiscal system and ecological environment

The digitalization of fiscal systems has revolutionized government financial management worldwide; however, its environmental implications remain underexplored. This study examines how digital fiscal infrastructure impacts the ecological environment by analyzing China's Golden Tax Phase III project—a comprehensive digital transformation initiative. We propose a theoretical framework identifying three key mechanisms through which digital fiscal systems influence ecological outcomes: enhanced monitoring of polluting activities, improved resource allocation for environmental protection via more efficient tax collection, and strengthened corporate environmental compliance. Employing a difference-in-differences approach with provincial-level panel data from 2015 to 2022, we find that the implementation of Golden Tax III significantly improved environmental conditions, as demonstrated by substantial reductions in PM2.5 concentrations. The effects are more pronounced in regions with advanced digital infrastructure and higher institutional quality. Further analysis shows that the environmental benefits arise from both improved market efficiency and strengthened government oversight. These findings indicate that digital fiscal reform can be an effective tool for ecological governance. Our results contribute to the growing literature on the spillover effects of digital transformation in public administration and offer policy insights into leveraging fiscal digitalization to promote environmental sustainability.