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

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Cong Li
Cong Li
Cong Li
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Yao Teng
Yao Teng
Yao Teng
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Yunxu Zhou
Yunxu Zhou
Yunxu Zhou
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Xueting Feng
Xueting Feng
Xueting Feng
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Abstract and Figures

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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Vol.:(0123456789)
Environmental Science and Pollution Research (2024) 31:9371–9391
https://doi.org/10.1007/s11356-023-31736-6
RESEARCH ARTICLE
Can environmental protection tax force enterprises toimprove green
technology innovation?
CongLi1· YaoTeng2· YunxuZhou3· XuetingFeng1
Received: 21 October 2023 / Accepted: 20 December 2023 / Published online: 8 January 2024
© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2024
Abstract
The introduction of an environmental protection tax enables a smooth shift from the sewerage charge system to the environ-
mental 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 technol-
ogy 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 environmen-
tal 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.
Keywords Environmental protection tax· Corporate green technology innovation· R&D investment· Innovative human capital·
Financing constraints
Introduction
Since the introduction of economic reforms, China’s econ-
omy has experienced consistent growth. However, its unso-
phisticated development approach has caused significant
environmental damage. This is due to the rapid development
pace of enterprises with low technological proficiency and
a low-level industrial structure, which exacerbates environ-
mental pollution. Green technological innovation encom-
passes all technological innovation activities that support
enterprises in controlling pollution and is crucial for accel-
erating the shift to sustainable development modes for com-
panies (Xu etal. 2023). Therefore, promoting green tech-
nological innovation has become an effective strategy for
reducing pollution. Since 2018, China has implemented an
environmental protection levy on businesses that discharge
Responsible Editor: Nicholas Apergis
* Yunxu Zhou
yunxu@qdu.edu.cn
Cong Li
qdulc2016@163.com
Yao Teng
tanya2426@163.com
Xueting Feng
fengxueting0328@163.com
1 School ofEconomics, Qingdao University, Qingdao,
Shandong, China
2 School ofEconomics andManagement, China University
ofPetroleum-Beijing, Beijing, China
3 College ofInternational Education, Qingdao University,
Qingdao, Shandong, China
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
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