Economic and Environmental Effects of Coal Resource Tax Reform in China: Based on a Dynamic CGE Approach

Coal resource tax reform from quantity-based collection to ad valorem collection has been raised recently by the Chinese government, to develop a low-carbon economy. This paper builds a multi-sectoral dynamic computable general equilibrium (CGE) model to study the general impacts of such reform policy on the Chinese economy and environment. Based on the proposed model, different policy designs with different ad valorem tax rates are simulated and further compared with the current quantity-based policy, and some results can be obtained. As for the economic influence, the gross domestic product (GDP) of China would be somewhat negatively affected by the reform. From the environmental perspective, total carbon emissions would be significantly mitigated, which can effectively improve the Chinese environment