The Economic Impacts Emission Reduction Effect Of Environmental Tax Essay

The Economic Impacts Emission Reduction Effect Of Environmental Tax Essay

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Abstract: In this paper, the economic impacts emission reduction effects of environmental tax are simulated based on a dynamic computable general equilibrium (CGE) model, taking sulfur tax and carbon tax as examples. The results found that, under the baseline scenario, China‘s economy will keep growing. The total GDP will reach $69.95 by 2100. SO2 emissions will continue to reduce. Carbon emissions present characteristics of EKC, the peak value appeared in 2034, carbon emission peak value is 3832 MtC. Under sulfur tax scenario, GDP will reach 60.10 trillion dollars in 2100.Collecting sulfur tax not only reduces the SO2 emissions, but also decreased carbon emissions significantly compared with the baseline scenario, carbon emissions peak ahead to 2032. Under carbon tax scenario, China 's GDP will reach to $64.54 by 2100, carbon emissions peak appeared in 2033, the peak value is 3564.65 MtC, while SO2 emission is smaller than the baseline scenario. Under the sulfur tax and carbon tax scenario, China 's GDP will be $55.12 in 2100, which is $14.83 smaller than the baseline scenario, while SO2 emission and carbon emissions were reduced, carbon emissions peak appeared in 2031.
Keywords: SO2; carbon emissions; dynamic CGE; economic effects; environmental tax
Introduction
Environmental tax, also known as eco taxes, green taxes, is to solve the environmental pollution, which rose in international taxation academia at the end of the twentieth century, there is not a clear definition yet. In general, the environment tax internalizes the social cost of ecological destruction and environmental pollution into the production cost, the producers’ and the consumers’ behaviors are affected through the market price, the distribution of environme...


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...sults found that carbon tax can reduce CO2 emissions and adjust energy structure, but it will have certain influence on the economy, so carbon tax should started with lower rate [11].
As the voice of environmental taxes growing in recent years, the environment tax rate design becomes the focus in the academic circles. During the research above only one environmental tax is analyzed. What effect does levying environment tax have? What kind of impact will it have on the economy? Will different types of taxes have influence on each other? How to design tax rates to protect the environment at the same time not causing serious economic fluctuations? To answer these questions, this article, taking sulfur tax and carbon tax as examples, simulated the impact of environment tax on the macro economy and emission reduction effect based on the dynamic general equilibrium model.

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