Spatial spillover effects of environmental taxes on green innovation: an analysis of the regulatory role of government environmental regulation.

The differentiated regional environmental tax policies have provided a space for polluting enterprises to avoid environmental costs through regional transfer, bringing spillover effects from pollution and green innovation. These spillover effects have increased the difficulty of environmental taxes in stimulating green innovation. Moreover, the intensity of local governments' environmental regulations can also affect the effects. Ignoring governments' regulations may lead to inappropriate inferences about the relationship between pollution reduction policies and technological innovation. Using inter-provincial panel data from 2005 to 2019, this article developed a theoretical framework for the analysis of government environmental regulation, environmental taxes, and regional green innovation, employed a spatial panel Durbin model to empirically analyze the spatial spillover effects of environmental taxes on green innova -tion and the interaction of environmental supervision, and further examined the transmission mechanism of the impact of environmental taxes on green innovation in neighboring areas. The results showed that the local-neighborhood green innovation effects of environmental taxes had an inverted U-shape. Government environmental regulation could improve the innovative compensation effect of environmental taxes and reduce the capture probability of environmental regulation, which would strengthen the impact of environmental taxes on green innovation. The green innovation effect of environmental taxes had obvious regional heterogeneity. The above effect characteristics were only applicable to China' s eastern region. In the neighborhood effect, government environmental regulation was only significant in the central region and significantly enhanced the impact of environmental taxes on green innovation. The trans-regional flows of human capital and polluting industries were important factors contributing to the spatial characteristics of the local -neighborhood green innovation effect of environmental taxes. High-intensity environmental tax areas led to the outflow of human capital and the return of polluting industries by a two-way effect in neighboring areas and promoted green innovation in the short term. However, in the long run, the agglomeration of polluting industries, the loss of high-quality talents, and the continuous deterioration of the environment would ultimately inhibit the green innovation of neighboring areas. To enhance the effect of environmental tax policies, local governments should prudently formulate environmental tax rates, improve the environmental supervision system, further optimize the talent development mechanism, and improve the regional industry collaborative management mechanism. [ABSTRACT FROM AUTHOR]