Effects of special fiscal revenue on industrial pollution and the spatial spillover: evidence from 30 provinces in China

In China, industrial pollution is a prominent source of environmental pollution, and the important goal of sustainable development is to reduce industrial pollutant emissions, while ensuring economic stability. Special fiscal revenue (SFR) is the direct channel of government environmental regulation and the main source of environmental protection investment; it is of great significance to analyze the influence of special revenue on industrial pollution for industrial sustainable development. Therefore, this paper uses panel data from 30 provinces in China from 2005 to 2018 to empirically analyze the impact of SFR on the comprehensive industrial pollution index (CIP) and the spatial spillover effect by combining traditional regression and spatial econometric model. The empirical results show that: (1) The increase in SFR will significantly reduce the level of regional CIP emissions, and it verifies the role of SFR as a channel of government environmental regulation and a major source of special funds for environmental protection. (2) SFR exists a significant negative spatial spillover effect. For every 1% increase in SFR in surrounding provinces, the local CIP will decrease by about 0.448%, reflecting SFR has a stronger inhibition effect on CIP for surrounding areas. (3) According to the analysis of different periods, the main impact of SFR on CIP is after the new round of reforms in 2012. The sources and expenditure channels of SFR are more transparent, indicating that the institutional policies have a significant effect on emission reduction. (4) The analysis of individual heterogeneity finds that the increase of SFR in economically underdeveloped areas has a stronger inhibitory effect on CIP, and the space for technological progress in economically developed areas is small, so it is difficult to inhibit CIP in a short period of time. In addition, the instrumental variable model and robustness test support the above conclusions.