Fiscal Decentralization, Environmental Protection Tax, and Air Pollution: An Empirical Analysis from the Perspective of SO2 Emissions in 30 Provinces

DOI: https://doi.org/10.62517/jmsd.202412108

Author(s)

Zishuang Wang*

Affiliation(s)

School of Management, Wuhan Institute of technology, Wuhan 430205, Hubei, China * Corresponding Author

Abstract

Rapid economic development has brought many benefits to the people, but the contradiction between economic development and environmental degradation is also becoming increasingly prominent. In this context, through the panel data of 30 provinces (cities and autonomous regions) except Xizang from 2004 to 2020, a panel vector auto regression model (PVAR) was constructed, and the dynamic relationship between fiscal decentralization and variance decomposition was investigated using the impulse response function and variance decomposition methods. The results indicate that: (1) there is an important dynamic relationship between the emissions of sulfur dioxide, the tax rate of sulfur dioxide, and the decentralization of fiscal revenue. The increase in disposable income of local governments will correspondingly increase the cost of environmental governance, thereby achieving better air governance effects. (2) The dynamic relationship between sulfur dioxide emissions, sulfur dioxide tax rates, and fiscal expenditure decentralization is not significant. The reason may be that vicious competition between local governments will exacerbate the level of air pollution, and the behavior of local governments' prioritizing economy over environmental protection will lead to an increase in pollution levels instead of a decrease.

Keywords

Fiscal Decentralization; Air Pollution; Environmental Protection Tax; PVAR Model

References

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