Will resource tax reform raise green total factor productivity levels in cities? Evidence from 114 resource-based cities in China

Abstract

One of the new development concept is to enhance Green Total Factor Productivity (GTFP). Based on examining the theoretical basis of how resource tax reform affects GTFP, a natural experiment was used to empirically assess how the reform of resource taxes affects the GTFP. Our findings reveal a significant increase in GTFP following resource tax reform. The main contribution of this article lies in constructing a multi-time point difference-in-differences model, which enables clarification of the impact of resource tax reform on GTFP from the perspective of various resource taxes. Then we deduce that resource tax reform enhance GTFP levels by encouraging the transformation of resource-based cities into modern industrialized cities and reducing dependence on resource sectors. However, it is worth noting that resource tax reform may slow down economic growth and investment in scientific and technological innovation in cities heavily reliant on natural resources. In addition, resource tax reform promotes technological advancement through industrial upgrading, albeit with an adverse effect on technical efficiency. This observation implies that resource tax reform should be harmonized with all aspects of urban development. This research offers valuable policy insights on how to develop scientific and reasonable resource tax policies to improve economic development and environmental protection in an environmentally responsible manner.