Government's"Hidden Subsidies"in Fiscal Incentive Environmental Regulation:From the Perspective of Corporate Effective Income Tax Rate
How not to increase the burden of enterprises in the process of environmental regula-tion is an issue that needs to be considered in the design of environmental regulation policies.Based on the data of Chinese industrial enterprises above designated size from 2009 to 2014,this paper constructs a difference-in-differences(DID)model to assess the impacts of horizontal fiscal incentives such as cross-provincial watershed ecological compensation on enterprises in the com-pensated areas,using the Xin'anjiang River Basin Water and Environmental Compensation Agreement formally signed by Anhui and Zhejiang provinces in 2012 as a quasi-natural experi-ment.The results show that the horizontal fiscal incentive environmental regulation significantly reduces the pollutant emission level of enterprises in the compensated area;more importantly,the effective income tax rate of the enterprises in the compensated area also decreases significant-ly,which is caused by the tax administration of local governments in the compensated area,sug-gesting that local governments in the compensated area provide"hidden subsidies"to the enter-prises through tax administration.Further research reveals that local governments do not provide"explicit subsidies"through fiscal subsidies.The results indicate that under the horizontal fiscal incentive environmental regulation,local governments do not transfer the fiscal pressure brought by environmental regulation to enterprises,but rather provide enterprises with certain"hidden subsidies".
environmental regulationcorporate income taxhidden subsidies
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