Study on the Emission Reduction Effect of Environmental Protection Tax—An Empirical Study Based on the Change of Pollution Charge Standard in China?

This paper reflects the actual effect of China’s environmental protection tax by empirically analyzing the environmental effect of the emission fee, in order to provide reference for China’s environmental tax reform. Based on the traditional environmental “Kuznets” model, the factor of environmental tax is added to verify the effect of environmental governance of environmental tax. The results show that: 1) the improvement of sulfur dioxide emission charge standard can effectively inhibit industrial sulfur dioxide emission, which verifies the existence of environmental effect of pollution levy policies. 2) The improvement of sewage charge standard has better inhibitory effect on sulfur dioxide emission per unit GDP than on sulfur dioxide emission. 3) There is regional heterogeneity in the “emission reduction” effect of sulfur dioxide emission charges in the eastern, central and western regions of China. Pollutants should be taxed differently according to regional differences. 4) Economic growth and sulfur dioxide emission show an inverted “U” shape, China is still in the stage before the inflection point of EKC. Economic growth still takes environmental damage as the cost, and the “emission reduction” effect of technological progress is not ideal, which reveals the urgency of in-creasing technological development in the field of green environmental protection under the current situation.


Introduction
According to the World Health Organization (WHO), 137 million deaths per year in 2016 were due to environmental pollution, accounting for 24% of global deaths, meaning that a quarter of all global deaths are linked to environmental risks. A clean and healthy environment can reduce the global burden of disease by nearly a quarter (WHO). In particular, the COVID-19 pandemic is a further reminder of the delicate relationship between humans and the planet. China's economic development has shifted from a speed-based efficiency to a quality-based one, and our traditional "high energy consumption and high emission" economic development model will eventually bring about environmental problems that will not only cause huge socio-economic losses, but also endanger public health and may aggravate social inequality (Qi & Lu, 2015).
Theoretically environmental taxes can shift the tax burden from labor and capital elements to pollution emissions and natural resource use (Li & Xiong, 2017). Since China's environmental protection tax only started to be collected in 2018, it is not yet possible to directly use data from China's environmental protection tax to conduct empirical studies to verify the environmental effects of the environmental protection tax. Existing studies on the environmental effects of environmental protection tax mainly simulate and predict the effects of environmental tax reform on economy and environment by constructing general equilibrium analysis models and other methods (He & Li, 2009;Liu & Lv, 2009), for example, (Qin et al., 2015) used environmental economic general equilibrium analysis system to simulate the effects of environmental tax reform on macroeconomy, and pollution emission reduction, and found that environmental tax has a positive effect on pollution emission reduction. Most of the previous studies affirmed the environmental effects of environmental protection tax, but these simulations and prediction studies could only theoretically explain the environmental effects of environmental tax, but could not consider the influence of complex realistic factors on the effect of environmental protection tax, and could not accurately reflect the actual effect of environmental protection tax in China. Whether the environmental tax, as one of the important economic control tools in environmental regulation, can force enterprises to reduce their emissions through price means needs to be studied in depth. Considering that China's environmental protection tax is derived from the "tax burden shifting" of the sewage charge, and that the sewage charge system has been in place for more than ten years, this paper reflects the actual effect of the environmental protection tax in China by empirically analyzing the environmental effects of the sewage charge.
In addition, most of the existing literature discusses the environmental effects of the sewage charging system in China by using the total amount of inter-provincial sewage charges as the measurement index ignoring the endogenous problems that may be caused by the "quantity-based" characteristics of the sewage charges in China (Cui & Liu, 2010), and therefore, it is concluded that the inhibition effect of sewage charge on pollution emission is not obvious. The

Model Design
In order to provide a preliminary understanding of the relationship between economic growth, emission levy standards and sulfur dioxide emissions, the changes in emission levy standards and sulfur dioxide emissions, and GDP per capita and sulfur dioxide emissions are depicted as scatter plots respectively. The scatter plot shows that the higher the standard of sewage charges, the lower the sulfur dioxide emissions (Figure 1), and the relationship between sulfur dioxide emissions and China's GDP per capita is inverted "U" (Figure 2), which coincides with the shape of the Environmental Kuznets Curves (EKC). Environmental  Kuznets theory considers that economic development inevitably destroys the environment ignoring the dynamics of technology, preferences and environmental investments, while over time, environmental degradation decouples from economic development (Panayotou, 1993). At higher levels of economic development, structural economic changes toward information and services industries, more efficient technologies and increased demand for environmental quality lead to a trend toward a steady decline in the extent and rate of environmental degradation (Stern, 2015).
Based on the above empirical facts, this paper adds the factor of environmental taxation to the traditional environmental "Kuznets" model to verify the effect of environmental taxation on environmental governance.
The form of the EKC model traditionally used for panel data analysis includes factors other than economic development that affect environmental quality.
In the equation above, En t is the environmental pollution situation of a region at time t, which is generally expressed by pollution emission or environmental quality index. 0 β is a specific parameter related to the region; Ec t is the economic output of the region at time t, which is often measured by GDP or GDP per capita. 1 β , 2 β is the parameter.
According to the relevant theoretical and empirical analysis, the model of environmental tax's environmental governance effect is as follows.

Variable Description
Explanatory variables. Environmental pollution level (enq): industrial sulfur dioxide emissions and sulfur dioxide emissions per unit of GDP were selected as the explanatory variables to make an empirical test of the environmental effects of environmental taxes in China. The reason for choosing industrial SO 2 emissions as an indicator of environmental quality is that SO 2 emissions are mainly from industrial production, and China's environmental regulatory system has only just been completed, which has a limited role in regulating polluting consumption behavior. The inclusion of sulfur dioxide per unit of GDP is to explore the impact of the levy rate on the green efficiency of production activities.
Main explanatory variables. Environmental tax (ent): At present, there are different definitions of environmental tax in a broad sense and in a narrow sense. The environmental tax in a narrow sense is mainly based on the theory of environmental externality and the theory of Pigou tax, which refers to the tax levied specifically on certain environmental pollution behaviors; the environmental tax in a broad sense also includes other taxes related to the environment other than those levied on specific pollution behaviors. China's environmental tax is based on the policy of "sewage charge" and the principle of "tax burden shifting", so before the Environmental Protection Tax Law, the sewage charge actually played the role of environmental tax in China. Therefore, the environmental effect of environmental tax is investigated by using the emission fee rate as the main explanatory variable.
Control variables. Level of economic development (gdp): higher levels of economic activity (production and consumption) require more energy and material inputs and produce more waste by-products. Environmental quality is influenced by economic activities, and economic development affects environ-mental quality mainly through scale, technological and structural effects (Grossman & Krueger, 1992). Therefore, this chapter uses the level of economic development as one of the control variables and the real GDP after price deflating as a measure of the level of economic development.
Industrial structure (industry): As the economic level increases, the industrial structure will also change. There is a strong dependency between the environment and industry in China (Si & Cao, 2021) and the impact on environmental quality in the process of industrial structure change is the structural effect of economic growth on environmental quality. In general, the greater the share of industrial output in the economy, the more serious the pollution caused to the environment (Cai & Li, 2009). Therefore, in this paper, the ratio of the output value of secondary industry divided by GDP is used as an indicator of industrial structure.
Level of technological innovation (rd): the speed and direction of technological change is one of the important factors affecting environmental problems (Jaffe, Newell, & Stavins, 2000), and the number of patents for technological R&D reflects the level of technological innovation, but since it is difficult to obtain data on patent grants in the field of energy conservation and emission reduction, this paper measures the level of technological innovation by the number of granted patent applications per capita (Yu & Li, 2018;Xue & Wu, 2014).

Descriptive Statistics
This paper studies the relationship between environmental taxes and environmental pollution. Since the panel data have corresponding cross-sectional data at the time series level at the same time, problems such as non-linearity and non-smoothness are likely to exist, so this paper uses the natural logarithm method to process the data, ln denotes the previous scale of the data variables, and the descriptive statistics of the processed variables are shown in Table 1, and the data show that there are large differences between the relevant indicators in various provinces and cities across the country.

Analysis of Regression Results
According to existing studies, the environmental protection tax effect may have  (Ciaschini et al., 2012;Zheng, 2019). Therefore, in order to investigate whether there is regional heterogeneity in the environmental effects of sewage charges, after regressing 30 provinces and cities across China, this paper will follow the classification criteria of the National Bureau of Statistics for the three major economic zones in China, and divide 30 provinces and cities (excluding Hong Kong, Macao and Taiwan; Tibet Autonomous Region is excluded due to some missing data) into After regressing the 30 provinces and cities (excluding Hong Kong, Macau and Taiwan; Tibet Autonomous Region is excluded due to some missing data), this paper will divide them into East, Central and West regions to further investigate the heterogeneity of the environmental effects of environmental taxes in the three major economic zones in China.     significantly reduce SO 2 emissions, which indicates that regional differences should be taken into account when setting environmental tax standards in order to achieve the expected "green effect".

Further Discussion
In order to further investigate the environmental effects of environmental taxes, the regression results are shown in columns (5)-(8) of Table 2, with the "green efficiency" of production activities as the explanatory variable again for the whole country and the East, Central and West regions. The regression results, it can be found that the estimation of the variable lnent is significantly negative, indicating that the increase of sulfur dioxide emission fee levy standard has effectively suppressed the sulfur dioxide emission. At the national level, the estimated coefficient of the variable lnent is −0.218 and passes the 1% significance test, indicating that for each percentage point increase in sulfur dioxide emission charges, sulfur dioxide emissions per unit of GDP will be reduced by 0.218 percentage points. Comparing the results in columns (1) and (5), it can be found that the effect of the increase in the emission fee standard on reducing sulfur dioxide per unit of GDP is better than the effect of reducing total sulfur dioxide emissions, which indicates that the increase in the emission fee levy standard is conducive to improving the green efficiency of China's economic growth, but because China's economy is still in a period of rapid growth, the emission reduction effect of the increase in the emission fee standard on total sulfur dioxide emissions However, since China's economy is still in a period of rapid growth, the emission reduction effect of the increase in emission charges on total SO 2 emissions is partly offset by the expansion of economic production scale, resulting in the emission reduction effect of emission charges on total SO 2 emissions is slightly weaker than that on SO 2 emissions per unit of GDP.

Research Conclusion and Implications
This paper analyzes the impact of the sewage charge levy standard on the emission of environmental pollution pollutants based on the three national policies to raise the sewage charge standard and the differences in the time of implementing the policy and the provincial sewage charge standard in each province, so as to verify the environmental effects of environmental protection tax in China. The results found that: First, the increase of the emission fee standard can effectively reduce the level of sulfur dioxide emissions and sulfur dioxide emissions per unit of GDP in China, which indicates that the increase of the emission fee standard not only helps to reduce the level of pollution in China, but also helps to improve the "green efficiency" per unit of GDP, and the effect of the increase of the sulfur dioxide emission fee standard on improving the "green efficiency" per unit of GDP is better than the effect of reducing sulfur dioxide emissions.
Secondly, the regressions on the east, middle and west regions of China show that there is "regional heterogeneity" in the effect of sulfur dioxide emission reduction, both in terms of sulfur dioxide emissions as the explanatory variable and sulfur dioxide emissions per unit of GDP as the explanatory variable, suggesting that the environmental tax reform needs to be "tailored to local conditions", in other words, the tax standards for pollutant emissions should be set differently according to the environmental carrying capacity, industrial structure and economic development level.
Third, the square of GDP is negatively correlated with the level of environmental pollution. The level of economic development is positively correlated with the level of environmental pollution. This result indicates that the relationship between economic growth and environmental pollution level in China is in the shape of "inverted U", which is consistent with the hypothesis of environmental Kuznets hypothesis. China is still at the stage before the inflection point of the environmental "Kuznets" curve, and the technological progress is not ideal for reducing sulfur dioxide emissions, and the growth of economic scale still brings a lot of pollutions, which indicates that the current technology level of green environmental protection is not effective in reducing pollutant emissions. In order to realize the "double dividend" of environmental protection tax, we should increase the support for "green" technology to reduce the pollution emission level by technological progress.