Inequality of environmental tax pressures along value chains within China

Abstract

Understanding the environmental tax inequality along the domestic value chain is essential to promote the sustainable implementation of environmental tax policy. However, how the environmental tax flows along the value chain and how the inequality of environmental tax formulated across regions of China are still elusive. Here we developed an analysis framework to trace the generation of environmental tax of different production roles with aid of Value Chain theory and Multi-Region Input-Output model. Around 44% - 95% of environmental taxes stemmed from production processes involving two or more regions, with the environmental taxes triggered by intermediate products surpassing those levied by final products. We identified significant disparities and concentration patterns in environmental tax burdens. The North Central bears a greater burden of environmental taxes as crucial suppliers of resources and energy intermediate products to Coastal areas, which carry lower environmental tax burdens with more equipment manufacturing and service sectors.