Analysis of the Applicable Rate of Environmental Tax through Different Tax Rate Scenarios in China

Faced with increasing conflicts between economic and environmental development, it is extremely urgent to promote the green growth of enterprises. As an incentive environmental regulation measure, an environmental tax has been proven to effectively alleviate environmental problems and reduce corporate pollutant emissions. From the perspective of environmental tax equity and efficiency, this study collects more than 100,000 enterprises' pollutant-discharge and pollutant-discharge fee data from 4300 pollutant disposal enterprises in Yunnan Province, China in 2017. The study analyzes the marginal abatement cost (MAC) of water pollution and air pollution in key industries by using the MAC accounting method. Under the three scenarios of low, medium and high tax rates set by the study, the study evaluates the applicable tax rates of environmental tax of enterprises under different tax rates. The main findings of the study are: (1) the MAC of pollutants in various industries is quite different in different industries; (2) the environmental tax rate of 2018 is generally low and is not enough to encourage enterprises to reduce more pollution; (3) most enterprises will not invest a large amount of funds to carry out technological transformation for green production, without the government's mandatory environmental regulation measure. The study recommends that the government needs to increase the environmental tax rate, gradually approach the cost of corporate pollutant-treatment and force the technological transformation of enterprises. At the same time, the government itself needs to do a good job of tax neutrality, increase the compensation for environmental protection behaviors of enterprises, and encourage green development of enterprises. Finally, the taxation supervision should be strengthened, and the tax violations of enterprises should be checked strictly for avoidance of tax cuts against rules.