The International Practice of Carbon Tax and its Implications for China

Abstract

With the emergence of environmental problems such as global warming, sea level rise and frequent climate extremes, countries around the world are now placing great emphasis on controlling carbon emissions, and China is also actively reforming its environmental tax by introducing a carbon tax to align with international standards. This paper summarises the experience of carbon taxation in Europe and Japan, and proposes policy recommendations in the light of the current economic development and actual situation in China, taking into account the experience of carbon taxation countries. This paper argues that China's carbon tax rate should develop in a stepwise manner, gradually increasing from low to high over time, and that the carbon tax should only be levied on the upstream production stage, but not on the downstream consumption stage for the time being, with the tax base based on the carbon content of energy products. In terms of carbon tax revenue, this paper argues that the "double dividend" effect of the carbon tax should be fully utilised to stimulate the economy, actively promote the rapid recovery and development of the affected industries in the post-epidemic era, and reduce the burden on households. In terms of tax relief, a certain degree of incentive should be given to enterprises that have achieved their emission reduction targets, and attention should be paid to the carbon tax balance of domestic industries in bilateral trade.