Study Of Double Dividend Of Environmental Tax Based On CGE Model

More than30years since reform and opening up, China’s economy achieved rapiddevelopment, but followed by increasingly serious environmental pollution,ecological degradation. The report of the18th CPC National Congress pointed outthat China should impose a ceiling on total energy consumption, save energy andreduce its consumption. We should preserve our geographical space and improve ourindustrial structure, way of production and way of life in the interest of conservingresources and protecting the environment. More and more politicians, academicsrealized that we should accelerate reform of the fiscal and taxation system and make itconducive to changing the growth model. This is an important way to promote therealization of the above objectives. The practice of developed countries shows thatenvironmental tax can play a good role in promoting environmental protection, energyconservation and emissions reduction. Can environmental tax ensure the economicdevelopment, residents’ welfare level is not lower when the purpose of energyconservation and emissions reduction is achieved? It raises the question:environmental tax can achieve "double dividend"?The main purpose of this paper is to verify whether environmental tax can achievethe "double dividend". On the basis of the realization of "the first dividend"(emissionsreduction), can environmental tax achieve the "double dividend"(the increase in thelevel of GDP or resident welfare)? Meanwhile, environment tax’s influence on energyconsumption and industrial output is studied, in order to make the whole researchsystem more complete.Taking Shandong Province as an example, Shandong Province Macro SocialAccounting Matrix and Shandong Province Social Accounting Matrix decompositiontable are compiled. This study Combinates Shandong‘s actual situation and researchneed to build a CGE model, this study focuses on the design of environment moduleequations and depicts environmental tax‘s levy in different parts (production,consumption and import) and dynamic model was realized. Five different scenariosbetween2015and2020are simulated respectively. The results show that:First, although the simulation results doesn’t support the environmental tax‘s "strong double dividend" hypothesis, but "weak double dividend" can be realized.Environmental tax can reduce carbon dioxide emission. Although to meet the needs ofthe increase in GDP and resident welfare can not be achieved under the premise ofmeet the emission reduction, but by reducing other distorting tax rate GDP andresidents’ welfare losses decrease and so as to realize "weak double dividend".Second, with the increase of rate, emission reduction effect of environmental tax isgetting better and better, but the negative impact on the GDP and resident welfare alsoincrease. The environmental tax return can to some extent make up for the loss ofGDP and resident welfare.Third, the reduction of production tax can get better results in make up for the lossof GDP and resident welfare more than the reduction of enterprise income tax.Fourth, environmental tax will impact on energy consumption structure andindustrial structure. The proportion of raw coal in the energy consumption will decline,the proportion of power, crude oil and refined petroleum products will have smallamplitude increase. However, in the short term, the coal-dominated energyconsumption structure is difficult to change in Shandong Province. Tertiary industryproportion increase, the proportion of the tertiary industry will be more than thesecond industry by2020.