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A case for introducing an explicit carbon price into China's export tax

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  • Xin Wang
  • Ji Feng Li
  • Ya Xiong Zhang

Abstract

In recent years, export value-added tax (VAT) refund rebate and export tax (EVRRET) measures have been adopted for energy-intensive products in China. They are proclaimed to be climate policy, yet there is no explicit and unique carbon cost set on export, and the implicit export carbon tax rates vary dramatically across sectors and over different periods. A method is provided to introduce an explicit and unique carbon cost into the current EVRRET. By setting a comparable carbon cost (US$20/tCO 2 and US$30/tCO 2 ) for eight major energy-intensive sectors to which the EVRRET is widely applied, it derives the corresponding ad valorem average rate for each sector. The introduction of a carbon cost into export VAT refund rebate policy would not increase the current export VAT refund rebate rate (except for the chemical sector), but would simply define a ceiling. However, the same introduction into the export tax policy would lead to an overall increase in sectoral export tax rates. In terms of competitiveness and World Trade Organisation concerns, the better option for introducing a carbon cost into Chinese exports would be through reforming export VAT refund rebate policy.

Suggested Citation

  • Xin Wang & Ji Feng Li & Ya Xiong Zhang, 2012. "A case for introducing an explicit carbon price into China's export tax," Climate Policy, Taylor & Francis Journals, vol. 12(4), pages 410-423, July.
  • Handle: RePEc:taf:tcpoxx:v:12:y:2012:i:4:p:410-423
    DOI: 10.1080/14693062.2011.644071
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    References listed on IDEAS

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    1. Piermartini, Roberta, 2004. "The role of export taxes in the field of primary commodities," WTO Discussion Papers 4, World Trade Organization (WTO), Economic Research and Statistics Division.
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    Cited by:

    1. Dong, Yanli & Ishikawa, Masanobu & Hagiwara, Taiji, 2015. "Economic and environmental impact analysis of carbon tariffs on Chinese exports," Energy Economics, Elsevier, vol. 50(C), pages 80-95.

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