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What is the role of resource tax in sustainable development? A firm-level analysis for China

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Abstract

While previous studies have recognized the importance of resource tax in environmental governance, we know relatively little about whether resource tax can get a win–win both in corporate financial performance (CFP) and corporate environmental performance (CEP). Using China’s resource tax reform (RTR) policy in 2016 as a quasi-natural experiment and adopting a difference-in-differences (DID) strategy, we estimate the real effect of resource tax on CFP and CEP. The results show that RTR increases the financial performance of the regulated firms by 32.26% and the environmental performance by 46.15% compared to the non-regulated firms, indicating that resource tax can promote firms’ sustainable development. Mechanism analysis shows that the effect of resource tax is mainly driven by firms’ technological innovation and productivity improvement. Moreover, we further find that RTR performs better for firms with weaker tax burden-shifting ability and firms located in areas with poorer resource endowments. Overall, our study not only provides evidence for the Porter hypothesis from the perspective of resource tax, but also offers important policy implications for developing countries in their pursuit of sustainable economic and environmental development.

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Data availability

Additional results and materials during the current study are available from the corresponding author on reasonable request.

Notes

  1. The literature also describes emissions tax as an environmental tax or an environmental protection tax, including carbon tax (e.g., Hagmann et al. 2019), sulfur tax (e.g., Xue et al. 2022), and nitrogen tax (e.g., Jiang et al. 2022).

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Authors and Affiliations

  1. Business School, Central South University, No.932 South Lushan Road, Changsha, 410083, Hunan, China

    Qin Xiao & Donghua Liu

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  1. Qin Xiao
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  2. Donghua Liu
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Contributions

Qin Xiao: conceptualization, formal analysis, and writing-original draft. Donghua Liu: data collection, methodology and writing—review and editing. The authors read and approved the final manuscript.

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Correspondence to Donghua Liu.

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Xiao, Q., Liu, D. What is the role of resource tax in sustainable development? A firm-level analysis for China. Environ Sci Pollut Res 30, 52227–52240 (2023). https://doi.org/10.1007/s11356-023-25976-9

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