A Study On The Impact Of The Reform From The Pollution Fee To The Environmental Protection Tax On Corporate Behavior

In recent years,our government has attached great importance to ecological environmental protection,continuously promoted the progress of ecological civilization,emphasized the improvement of ecological environmental protection system,and promoted the harmonious development of man and nature.The change of pollution fee to environmental protection tax is an important initiative to promote the construction and governance of ecological civilization,and is a major change in the government’s environmental pollution governance philosophy from administrative system supervision to green tax governance."Outline of the 14th Five-Year Plan(2021-2025)for National Economic and Social Development and Vision 2035 of the People’s Republic of China" released in 2021 further specifies the direction for tax reform,requiring the strengthening of green development legal and policy safeguards,implementing tax policies that are conducive to energy conservation,environmental protection and comprehensive utilization of resources.In this context,in order to promote green development and ecological civilization construction,it is of great theoretical and practical significance to explore the inner connection between "fee to tax" governance policy and corporate behavior.Chinese Environmental Protection Tax Law was implemented on January 1,2018,while the pollution fee was abolished at the same time,i.e.,"fee to tax".The implementation of the environmental protection tax law is of great significance in guiding enterprises to reduce pollution,promoting the formation of a green development mode,and realizing the synergistic development of economic society and environmental protection.Accordingly,assessing the impact of the "fee to tax"governance policy is crucial to further improving the environmental protection tax law,further promoting the green tax reform,and regulating carbon emissions with green taxes.Therefore,relevant studies have examined the possible impacts of environmental protection tax laws mainly on market responses(Jin et al.,2020;He et al.,2020;Tu et al.,2020),pollutant reduction(Han and Li,2020;Li et al.,2021),economic growth(Liu et al.,2021),dual economic and environmental dividends(Wu et al.,2019;Li and Masui,2019;Wang et al.,2019),and corporate innovation(Cheng et al.,2021),etc.The relevant studies,however,mainly focus on two perspectives,on the one hand,studies examine the impact of the environmental protection tax law such as the consultation draft or implementation regulations rather than the real impact of the environmental protection tax law after its implementation.On the other hand,studies focus on the policy response of heavy polluting enterprises.In contrast to the above studies,this paper,from a more general taxpayer perspective(including both heavily polluting and non-heavily polluting firms),examines the impact of the implementation of "fee to tax" governance policy on corporate tax avoidance,environmental protection investment,and green innovation strategy choice of polluting firms.Firstly,this paper constructs a difference-in-differences estimation to examine the potential impact of the implementation of "fee to tax" governance policy on corporate tax avoidance.This paper finds robust evidence that the degree of corporate tax avoidance has been enhanced after the implementation of the environmental protection tax law.In addition,the real effect appears in the year of the reform and shows a rising trend before declining,implying that enterprise’s reaction to the reform is gradually changing from "choosing tax avoidance as a short-term behavior" to "controlling pollution at source as a long-term plan".Further,these findings are particularly pronounced in subsamples with high environmental protection tax rate,poor financing environment and high level of environmental regulations,and the real effect increases as the tax rate rises.Three channels identified are the environmental enforcement pressure,environmental protection tax pressure and local government environmental governance pressure.Overall,this paper is helpful for the government to improve the construction of green tax system and strengthen tax data analysis and governance.Secondly,this paper further examines the potential impact of the implementation of "fee to tax" governance policy on enterprise environmental protection investment.This paper finds that the implementation of the environmental protection tax law has led to an increase in the scale of environmental protection investment,which has effectively alleviated insufficient environmental protection investment and significantly improved the efficiency of environmental protection investment.This effect appears in the year of the reform and shows a rising trend,indicating that the implementation of the "fee to tax" governance policy has a long-term positive impact on the environmental protection investment of enterprises.Further,the effect of the "fee to tax" governance policy on the scale and efficiency of environmental protection investment is more significant when the firm has external green investors or high quality of internal corporate governance,or is located in a region with high external environmental governance.The mechanism test shows that the "fee to tax" governance policy strengthens the pressure of environmental enforcement,the pressure of environmental protection tax increase,and the pressure of local governments’environmental management,which enhances the pressure and motivation of enterprises to improve the scale and efficiency of environmental protection investment.These findings can help provide empirical evidence and decision-making references for relevant government departments to further expand effective environmental protection investment,improve the efficiency of investment in the ecological environment,and effectively play the important role of environmental protection investment in effective pollution prevention and control.Finally,this paper explores the impact of the implementation of the "fee to tax"governance policy on enterprises’ choice of green innovation strategies.This paper finds that after the implementation of the environmental protection tax law,with the pressure of environmental law enforcement,the pressure of environmental protection tax increase,and the pressure of local governments’ environmental management,polluting firms tend to develop green innovation strategies by improving the quantity rather than the quality of green patents,seeking cooperation with other enterprises for green innovation,and crossing border for green innovation.In other words,when making green innovation strategy choices,polluting enterprises tend to choose lowquality strategy,high-cooperation strategy and high-exploitation strategy.Furthermore,this paper finds that after the implementation of the "fee to tax" governance policy,the increase of intellectual property protection helps to promote green innovation cooperation strategies,and the increase of government environmental protection subsidies helps to promote green innovation cooperation strategies and exploitation strategies.These findings help to enrich the literature on the effects of the "fee to tax"governance policy and enterprises’ green innovation,and are also of reference value to government departments in promoting enterprises’ green transformation.