Unexpected Environmental Pollution:Research on the Cross-Sector Spillover Effect of Tax Enforcement
We draw on a natural experiment generated by the Key Tax Source(KTS)supervision in China to evaluate the impact of strengthening tax administration on firm's emission behavior.Using a Fuzzy Regression Discontinuity Design,we find that KTS supervision by State Administration of Taxation significantly improves firm's SO2 emissions.The mechanism analysis shows that KTS firms tend to reduce their tax burden by over-emitting pollution;Meanwhile,local governments loosen environmental regulation on the KTS firms,which eventually causes KTS firms to adjust the energy utilization structure and reduce environmental protection investment.Further analysis shows that the pollution emission by KTS firms can be reduced by the implementation of tax credits and the improvement of environmental reg-ulation standards.
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