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Coal Taxation Reform in China and its Distributional Effect on Residential Consumers

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  • Qin, Ping
  • Zhang, Xiao-Bing
  • Xie, Lunyu

Abstract

There is an ongoing reform in coal taxation in China, from a quantity-based to a pricebased approach. While the coal tax could play an important role in resource conservation and air pollution reduction, its distributional effect is not well studied. This paper investigates the distributional effect of China’s coal taxes on households before and after the reform. We find that both the quantity-based and price-based coal taxes are regressive for residential consumers in China, that rural poor households are most affected, and that the coal taxation reform slightly reduced the regressivity of the coal tax. By simulation, we also find that the regressivity of the coal tax can be further improved if the tax rate scheme is set appropriately.

Suggested Citation

  • Qin, Ping & Zhang, Xiao-Bing & Xie, Lunyu, 2019. "Coal Taxation Reform in China and its Distributional Effect on Residential Consumers," EfD Discussion Paper 19-11, Environment for Development, University of Gothenburg.
    • Handle: RePEc:hhs:gunefd:2019_011
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    Cited by:

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    3. Zhang, Cong & Teng, Wei, 2023. "Natural resources led financing of investment: A prospect of China's provincial data," Resources Policy, Elsevier, vol. 86(PB).

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    More about this item

    Keywords

    coal tax; distributional effect; price-based tax; quantity-based tax;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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