Fiscal Decentralization,Tax Competition And Carbor Emissions

At present,our country has made great achievements in economy,but our environment is getting worse and worse and even seriously affects People’s Daily life.The phenomenon of rising global temperature has aroused people’s attention all over the world.China,as a country that occupies a large position in both population and economy,has the responsibility to deal with the problem of carbon emission.In the past,China always wanted to get rid of the state of backward countries and blindly accelerated economic development without paying attention to such problems as "high input,high consumption and high pollution".This makes our country in the achievement of rapid economic development,at the same time,environmental pollution is more and more serious.Sustainable development requires that while developing the economy,we should also pay attention to the improvement of people’s quality of life.Therefore,environmental pollution should be taken into consideration when pursuing sustainable development.Research on tax competition and carbon emission has been paid attention by many scholars.This paper will discuss the impact of tax competition on carbon emission from the perspective of China’s fiscal decentralization system,deepen the understanding of tax competition on carbon emission,and put forward reasonable Suggestions for China’s emission reduction.In China’s special fiscal decentralization system,the central government takes GDP index as the standard to evaluate the government’s performance.In order to pursue economic growth,the government adopts various competitive means to introduce foreign capital to develop regional economy.With the reform of the tax distribution system,governments at all levels have some power in taxation,and tax competition has become the main means for governments at all levels to pursue economic growth.Governments at all levels can use tax enforcement powers and fiscal expenditure to achieve disorderly tax competition,and then reduce the tax burden on some enterprises or relax the environmental pollution system,ultimately leading to the decline of environmental quality.In order to comprehensively measure the impact of tax competition on carbon emission from the perspective of fiscal system,this paper,based on the environmental economics theory and institutional economics,studies the relationship among fiscal decentralization,tax competition and carbon emission with fiscal decentralization as the regulating variable.First of all,based on the research of existing scholars in this field,this paper deeply analyzes the influence mechanism of fiscal decentralization and tax competition on environmental pollution and how fiscal decentralization regulates the influence mechanism of tax competition on environmental pollution.Then,using Davoodi and Zou(1998)model for reference,environmental pollution variables were added to obtain the relationship between fiscal decentralization,tax competition and environmental pollution under fiscal decentralization.Through this mathematical model,it is concluded that fiscal decentralization,tax competition and the interaction between fiscal decentralization and tax competition have positive relations with environmental pollution.Three hypotheses are put forward,that is,fiscal decentralization is positively correlated with carbon emission;Tax competition is positively correlated with carbon emissions;Tax competition strengthens its influence on carbon emission through fiscal decentralization.Then,the existence of these three hypotheses is verified by using the provincial data of China in recent 16 years.This paper verified the above hypothesis through spatial error and spatial lag regression method,and the empirical results showed that:first,carbon emissions have significant spatial correlation,and pollution between adjacent regions spreads and influences each other;Second,increased tax competition will exacerbate carbon emissions.Tax competition affects carbon emissions in two main ways.First,reduce the effective tax rate,which makes the negative externalities of carbon emissions not compensated;Second,relax the control of environmental pollution,which makes the high-polluting enterprises continuously enter the region;Third,there is a positive correlation between fiscal decentralization,a key variable,and carbon emissions.With high fiscal decentralization and China’s special leadership assessment system,local governments will be more inclined to pursue economic and sudden emission reduction work.When a large amount of foreign capital is introduced,it is acquired at the expense of the environment.In addition,with the continuous reform of China’s fiscal system,local governments are given more autonomy,and more governments collude with enterprises to reach rent transactions,thus resulting in the situation of"capital capture and environmental regulation".Fourthly,on the basis of the previous research,the regulatory effect of fiscal decentralization is further studied.Regions with high fiscal decentralization will intensify the adverse tax competition,which will strengthen the impact of tax competition on carbon emissions.Fifth,divide the whole country into east,central and western regions for empirical analysis,and find that fiscal decentralization in the eastern region does not have a strong impact on carbon emissions,while fiscal decentralization in the central and western regions has a strong impact on carbon emissions.In addition,fiscal decentralization,as a moderating variable,does not exist in the eastern and central regions and even weakens the impact of tax competition on carbon emissions.Based on the above conclusions,this paper puts forward the following Suggestions:(1)local governments should comprehensively coordinate emission reduction work.When controlling greenhouse gas emissions,geographical factors should be taken into account.Unilateral efforts to reduce greenhouse gas emissions are bound to fail to achieve the best results.We should strengthen the policy of interregional joint prevention and control,which is the inevitable choice for building a green China.(2)standardize inter-regional tax competition.As the supervisor of the market,the government needs to formulate a tax system strictly according to the marginal pollution treatment cost,so as to make up for the negative externalities caused by carbon emissions.We will improve the transfer payment system to make up for the cost of environmental pollution control.We will optimize taxes related to the environment and promote taxation.Take the environmental protection tax as an opportunity to form the positive superposition effect of emission reduction policy.(3)to improve China’s decentralization system.A good tax distribution system can not only make the local government balance revenue and expenditure,but also improve the effect of the environment.(4)We improved the appraisal system for leaders.In the past,local governments sacrificed the environment to pursue GDP,which seriously threatened people’s health.For sustainable development,we must take environmental quality into account in the leadership appraisal system.(5)Carbon emission control was strengthened in the central and western regions.The main measures are to strengthen green technology innovation in central and western China,promote enterprises to actively study green technology,and clear the source of the original.