Comparative Research On The Effect Of Government Subsidies And Tax Incentives On The Treatment Of Used Oil

At present,the phenomenon of used oil flowing back to the table still exists in China.Some illegal traders,driven by profits,illegally collect "used oil" and carry out secondary processing,which leads to the clear or hidden flow of used oil into the edible oil field,seriously damaging the lives and safety of the people.In fact,as a waste,besides the negative recycling of table reflux,used oil also has positive recycling value.Biodiesel is one of the main resource reuse destinations of used oil.In June 2018,in order to support the production of biodiesel made from used oil,Shanghai municipality,issued the Interim Administrative Measures Of Shanghai Municipality On Supporting The Promotion And Application Of Biodiesel Made From Used Oil,proposing to subsidize B5 diesel and support its promotion and application in the whole society.Shanghai’s demonstration model of encouraging used oil to make biodiesel and subsidizing B5 diesel fuel also provides new ideas for other cities in China to solve the problem of used oil.Therefore,it is an effective way for the government to encourage the recycling of used oil through subsidy and tax policies and promote the positive value of used oil to play its role in solving the problem of returning used oil to the table.By establishing a dynamic game model between the government and biodiesel producers and consumers under the government’s subsidy and tax incentive policies,this paper explores the incentive effect of the government’s subsidy and tax policies on biodiesel producers and consumers,so as to guide the used oil flow to the biodiesel market and promote the orderly and healthy development of the whole industrial chain of used oil.This paper first reviews a series of subsidy and tax incentive policies launched by the domestic government for the production of biodiesel from gutter oil,and discusses the solutions adopted by foreign governments for the treatment of the problem of gutter oil,and then specifically determines the research direction and research framework of this paper.Secondly,the second part of this paper combs the existing literature at home and abroad from the perspectives of used oil treatment,financial subsidies and tax preferential policies,and summarizes the main research contents of this paper on this basis.Thirdly,the third and fourth parts are the core of the article.The third part introduces the current development status of biodiesel industry in the United States,The European Union and other countries,as well as a series of financial subsidies and tax preferential policies to promote the development of biodiesel industry,providing reference for the formulation and improvement of relevant subsidy and tax policies for used oil recovery and the development of biodiesel industry in China.The fourth part mainly constructs the government and the biodiesel producers and consumers of dynamic game model,analyzed the subsidies and tax breaks in both cases,the government policies affect how biodiesel production and consumption,and comprehensive consideration of biodiesel supply and demand,analysis of policy variables how to affect the output of biodiesel is balanced,the equilibrium price and biodiesel manufacturer’s profits.Finally,the fifth part is the conclusion of this paper through the analysis of the above four parts.The influence of government subsidy policy on biodiesel production is analyzed when only biodiesel manufacturer’s decision is taken into account.When the government increases the subsidy,it increases the unit income of biodiesel manufacturers,thus improving their willingness to produce,thus promoting the increase of biodiesel production.The influence of government tax incentives on biodiesel consumption was analyzed when only consumer decisions were considered.When the government exempts biodiesel,it increases the consumption tax on ordinary diesel.The price of ordinary diesel is higher than that of tax-free biodiesel,so consumers are more inclined to consume biodiesel,thus promoting the increase of consumption of biodiesel.In combination with the supply and demand market of biodiesel,the influences of government financial subsidies and tax incentives on the equilibrium quantity,equilibrium price and profits of biodiesel producers were analyzed,which were taken into account of the decisions of biodiesel producers and consumers.When the government increases the subsidy,the equilibrium quantity of the biodiesel market increases,the equilibrium price decreases and the profit of the manufacturer increases.When the government imposes duty exemption on biodiesel,that is to say,it raises the consumption tax on other ordinary diesel,thus reducing the equilibrium quantity of the biodiesel market,increasing the equilibrium price and reducing the profit of the manufacturer.In the case of market equilibrium,from the perspective of consumer welfare,government subsidies not only reduce the equilibrium price of biodiesel,but also expand the equilibrium quantity of biodiesel,which is more effective than the impact of government taxes on the biodiesel market.From the perspective of biodiesel producers,government subsidies increase the profits of biodiesel producers,promote the increase of biodiesel production,increase the amount of recycled gutter oil input,and effectively avoid the problem of gutter oil flowing back to the table.The policy effect is better than the government tax.Through the numerical simulation of the market supply function and demand function of biodiesel as the objective function,we found that when the government subsidy was close to the American subsidy policy of 1,752 yuan/ton,the government subsidy had little impact on the biodiesel production.When the government tax credit is nearly equal to THE EU tax credit policy of 2,969 yuan/ton,the tax credit can slightly increase the consumption of biodiesel.However,when the market equilibrium is reached,that is,when the financial subsidies and tax incentives are large enough,the production of biodiesel is much larger than the consumption of biodiesel,indicating that the promotion effect of government subsidies on the production of biodiesel is greater than that of tax breaks on the consumption of biodiesel.The above conclusion is consistent with China’s reality.At present,China’s government is exempt from biodiesel consumption tax,but the domestic market demand for biodiesel is still insufficient,and its market supply exceeds the market demand.A large number of biodiesel is exported to the EU.Therefore,it is suggested that while the Chinese government subsidizes the production of biodiesel,domestic sales channels of the biodiesel market should be opened to find export for used oil treatment,so that the recycled used oil can be used up and the waste resources can be truly utilized.