Dynamic Tax Rate Optimisation of Environmental Protection Tax and Urban Industrial Pollution Abatement

This study focuses on the impact mechanism of environmental tax reform on environmental governance. The research hypothesis is that environmental protection taxes can effectively reduce industrial pollution emissions through pathways such as the diffusion of clean technologies and industrial structure upgrading, and there exists an optimal tax rate range to coordinate environmental regulation and economic development. The study integrates multi-source heterogeneous data, including industry classification standards from the Ministry of Ecology and Environment, environmental disclosure reports of listed companies, and regional statistical yearbooks. Interpolation methods are applied to handle discrete missing values, and observation units in Hong Kong, Macau, and Taiwan are excluded following the principle of regional data availability, constructing an environmental governance database covering major industrial cities across China. A three-sector dynamic stochastic general equilibrium model (DSGE) with pollution dynamic feedback is constructed to solve the Pareto-efficient tax rate range. Using a sample of 297 Chinese cities from 2014 to 2021, the difference-in-differences (DID) method is employed to evaluate the implementation effect of the Environmental Protection Tax Law of the People's Republic of China, and the optimal tax rate is calculated through the environmental governance cost allocation method. The data shows that increasing tax rates can significantly reduce industrial pollution emissions, but this effect varies significantly among cities with different levels of environmental regulation, cleanliness, innovation, and sizes. A notable finding is the institutional gap between the current actual tax rate and the optimal tax rate. The study indicates that the diffusion of clean technologies and industrial structure upgrading are the key transmission paths for environmental taxes to play a role in emission reduction. In the future, potential emission reduction dividends need to be released through stepwise dynamic tax rate adjustments. The data of this study provides a full-chain solution from theoretical threshold derivation and empirical effect testing to policy adaptation suggestions for the optimization of the environmental tax system, which helps to deeply understand the role mechanism of environmental taxes in environmental governance.