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Can environmental protection tax force enterprises to improve green technology innovation?

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Abstract

The introduction of an environmental protection tax enables a smooth shift from the sewerage charge system to the environmental protection tax scheme. This, in turn, promotes a more sustainable development of enterprise growth, emphasizing eco-friendliness. This is of immense importance in advancing environmentally aware practices and sustainability. Based on data collected from A-share listed companies in Shanghai and Shenzhen from 2014 to 2021, this paper investigates the influence of environmental protection taxes on the advancement of green technology and the underlying mechanisms. Taking the execution of the Environmental Protection Tax Law in 2018 as a quasi-natural experiment, a double-difference model is employed to examine the causal relationship between environmental protection taxes and the adoption of green technology by companies. The findings indicate that the introduction of an environmental tax could markedly enhance the extent of green technological innovation within corporations. The evidence arising from the testing mechanism implies that such a tax can encourage firms to boost their investments in research and development, upgrade their innovative human capital, and mitigate financing limitations. The study found that there is heterogeneity in the promotion effect of the environmental protection tax on the green technological innovation of businesses in different regions and provinces with varying tax burdens and types of equity capital. Further research shows that the environmental protection tax has a greater impact on the promotion of utility model patent applications for green technology innovation. This paper presents empirical evidence to support further enhancement of the environmental protection tax system. It recommends designing the environmental protection tax policy with consideration for enterprises and local conditions and bolstering the system’s capacity for guiding and stimulating enterprises’ green development.

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Funding

This research is supported by the National Natural Science Foundation of China (Grant number: 71903105), the Natural Science Foundation of Shandong Province (Grant number: ZR2022QG023), the Science and Technology Support Plan for Youth Innovation of Colleges and Universities of Shandong Province of China (Grant number: 2022RW032), the Mount Taishan Scholar Project (Grant number: tsqn202306167), and the Shandong Social Science Planning Research Project (Grant number: 23CJJJ11).

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Authors and Affiliations

  1. School of Economics, Qingdao University, Qingdao, Shandong, China

    Cong Li & Xueting Feng

  2. School of Economics and Management, China University of Petroleum-Beijing, Beijing, China

    Yao Teng

  3. College of International Education, Qingdao University, Qingdao, Shandong, China

    Yunxu Zhou

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  1. Cong Li
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  2. Yao Teng
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Contributions

CL (first author): conceptualization, methodology, data curation, and writing—original draft. YT: data curation and writing—original draft. YZ (corresponding author): conceptualization, funding acquisition, resources, supervision, and writing—review and editing. XF: resources and supervision.

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Correspondence to Yunxu Zhou.

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Li, C., Teng, Y., Zhou, Y. et al. Can environmental protection tax force enterprises to improve green technology innovation?. Environ Sci Pollut Res 31, 9371–9391 (2024). https://doi.org/10.1007/s11356-023-31736-6

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