Environmental Regulation and Tax Avoidance of Heavy Polluting Enterprises
MA Yahong1,2, YANG Suchang1
1. School of Economics, Lanzhou University, Lanzhou 730000, China; 2. School of Accounting, Lanzhou University of Finance and Economics, Lanzhou 730020, China
Abstract Government environmental regulation will have an impact on the operation and financial behavior of enterprises. Environmental regulation increases the production costs and the pressure of transformation and upgrading of enterprises, and may also make enterprises get into trouble due to the deterioration of business performance or the failure of transformation. Therefore, in the context of strong regulation, enterprises need to reduce costs and resist risks through tax evasion. Under the institutional background of the implementation of the new Environmental Protection Law in 2015 this paper, taking China's A-share listed enterprises as the research samples, uses the double difference method to study the impact of environmental regulation on the degree of tax evasion of heavily polluting enterprises. Empirical test finds that government environmental regulation significantly expands the degree of tax evasion of heavily polluting enterprises. After changing the measurement method of tax avoidance and using PSM-DID for robustness test, the conclusion remains unchanged. The results of further study are as follows. Small-scale enterprises and highly profitable enterprises are more likely to offset the negative impact of environmental regulation through tax evasion. The impact of environmental regulation on the degree of tax avoidance is significant only in resource-intensive industries, but not in technology-and capital-intensive industries. And the impact of environmental regulation on the degree of corporate tax avoidance is only significant in the eastern region and areas with better legal environment, but not significant in the central and western regions and areas with poor legal environment.
2022, Vol. 39 
