Taxing sulphur dioxide emissions: A policy evaluation from public health perspective in China

Abstract

With the rapid development of the Chinese economy, air pollution has increased in severity. Especially, sulphur dioxide (SO₂) has become of major concern because it can cause serious health problems like cardiovascular diseases and acidification of some soils and water bodies. To abate SO₂, tax policies may be adopted. However, to make such policies feasible, it is important for policy-makers to know the contributions of SO₂ emissions by individual industries. This paper first attempts to quantify the contributions to the total amount of SO₂ emitted. Secondly, we estimate, from the public health perspective, the socio-economic costs of SO₂ emissions related to these industries, and then compare the impacts of different tax policies from the public health perspective on reducing SO₂ emissions. Finally, multiple policy implications are outlined for the Chinese government. The results show that indirect emission tax outperform direct tax for improvements in public health, and ultimately of people's welfare. Our findings are essential for relevant policy-making in China, as well as other emerging economies.