The environmental cost of tax administration: evidence from a regression discontinuity design in China.

Tax collection and management is an important factor affecting corporate pollution emissions, but currently, few studies systematically and rigorously identify its effects. Based on China's tax collection and management reform and a microenterprise database, this paper uses a regression discontinuity design model to empirically analyze the impact of tax collection and management reform on environmental pollution and the mechanism of this impact. This study found that the tax collection and management reforms have significantly increased environmental pollution. On average, the environmental pollution of enterprises affected by the reform has increased by approximately 10.8%. This effect is more pronounced in companies with high innovation capabilities and financing constraints, companies in underdeveloped areas, zombie companies, large-scale companies, and non-labor-intensive companies. The impact mechanism analysis shows that tax collection and management reforms increase the tax burden and costs of enterprises and reduce enterprise operating performance, thereby exacerbating environmental pollution. The findings of this article help clarify the impact of government taxation decisions on environmental pollution decisions and have enlightening significance for improving taxation system design and reducing environmental pollution in developing countries.