Feasibility Study of China’s Carbon Tax System under the Carbon Neutrality Target—Based on the CGE Model

Round 1

Reviewer 1 Report

The study analyzes the necessity and theoretical research of carbon tax policy in China and explores the feasibility of introducing a carbon tax. The study has some innovative and practical implications. The following are my specific comments.

1. The language, chart, and format need to be improved, and the summary does not need to be segmented.

2. Carbon neutrality in the title and keywords is not well reflected in the articles and models.

3. Too few keywords.

4. Chapter III's purpose is unclear enough, and it is suggested to delete or add summary sentences related to the research.

5. The data source and processing should be more detailed.

6. The research results in Chapter V need to be supported by references or prove the scientificity of the research in other ways.

7. The policy recommendations in Chapter VI are too broad, do not fully correspond to the article's research conclusions, and lack relevant literature support.

Author Response

Dear Reviewer,

Thank you very much for your review of our article and your careful and rigorous review comments. After more than half a month of our revision, the article has been majorly revised. The abstract, keywords, theoretical study and empirical analysis have been optimized, added and deleted. We will now explain to you the major revisions. Please refer to the attached "Respond letter" for a detailed description of the whole article. In the following, I will respond to each of your suggestions.

1. The language, chart, and format need to be improved, and the summary does not need to be segmented.
  Response: Thank you very much for reading my article carefully. I have further optimized some of my language, and some of my chart formatting. And I would like to explain to you a little more about my abstract. Because my abstract is divided into two main parts. One part is the background of the article, and the other part is the introduction to the subject matter of the article. I am afraid that if I combine the two sections into one, it will be too long and drawn out. Therefore, it is divided into two paragraphs. If you feel that this area needs further revision, I will combine the two paragraphs of the abstract into one. Thank you very much for your valuable comments on the abstract.
2. Carbon neutrality in the title and keywords is not well reflected in the articles and models.
   Response: Thank you very much for your guidance on the keywords of the article. In this article, carbon neutrality is mentioned as the overall framework background of the article. China has set the goal of carbon neutrality by 2060 in 2020 and has therefore implemented many economic and political measures to reduce carbon emissions. However, a carbon tax has not yet been introduced. Therefore, based on the goal of carbon neutrality, I would like to use this as a background to explore whether a carbon tax can help achieve the goal of carbon neutrality. The most intuitive manifestation is the reduction of carbon emissions, which has been studied in empirical research. 
        At the same time, there is a need to balance the economic benefits with the achievement of the carbon neutrality target. Therefore, the article further investigates whether the environmental and economic benefits can be effectively achieved if a carbon tax policy is implemented in China. This is one of the keywords in this paper: carbon neutrality and the overall framework.
    Based on your suggestions, I further clarify the necessity and importance of a carbon tax to achieve the carbon neutrality goal in the introductory background, the empirical model, and the final conclusion of this paper. The keyword: carbon neutral is further highlighted from the theoretical aspect and empirical study. Thank you very much for your valuable comments on the content.
3. Too few keywords.
   Response: Thank you very much again for your guidance on keywords. Keywords are very important for an article and are usually the best description to help readers understand the research content more quickly. Therefore, based on your suggestions, I have added the outcome effect that I want to investigate in my empirical study: the double dividend effect. I also added the specific area of financial research to which the study belongs: carbon emissions, and environmental economics. Thank you very much for your valuable comments on the keywords.
4. Chapter III's purpose is unclear enough, and it is suggested to delete or add summary sentences related to the research.
   Response: Thank you very much for your careful and detailed review of the article content. Since China has not yet implemented carbon tax policy, but many countries and regions around the world have already levied carbon tax and done very well, in the third part, we try to study the commonalities and differences of four aspects of carbon tax models and tax rates in different countries around the world, so as to provide some experience reference for China to introduce carbon tax. In view of your comment that the purpose of Chapter 3 is unclear, we have added relevant topic sentences. We have also added the policy recommendations at the end of the paper, which echoes the reference to foreign experience. Thank you very much for your valuable comments on the content.
5. The data source and processing should be more detailed.
   Response: Thank you very much for your guidance on the empirical study and data sources. We have included the data sources and model codes used in the appendix. We have also briefly described the data and model we used in sections 4 and 5 of the paper. Based on what you said this section should be more detailed. We have further explained our data sources in sections 4 and 5 and added more explanation of the ideas and analysis of the model results in the results. Thank you very much for your valuable comments on the data model.
6. The research results in Chapter V need to be supported by references or prove the scientificity of the research in other ways.
   Response: Thank you very much for your valuable comments on the research results. This section is a visualization of the results based on our empirical modeling study. The model code in the appendix can be reproduced by GAMS software. However, as you said, we do not have many scientific explanations and literature references, so we have added some references and explained in more detail how the data results were obtained.
7. The policy recommendations in Chapter VI are too broad, do not fully correspond to the article's research conclusions, and lack relevant literature support.
   Response: Thank you very much for your valuable comments on the policy recommendations. The policy recommendations in Chapter VI are too broad, do not fully correspond to the article's research conclusions, and lack relevant literature support. Because we have spent a lot of time on the construction of the carbon tax model, the description of the policy proposal seems too broad. We have further refined the policy recommendations, taking into account the lack of prominence of the "carbon neutral" keyword you mentioned, and the lack of clarity in the third section on foreign carbon taxes. We have divided it into four parts. In this way, the article is well focused on the topic and the research results. I hope this revision will help you understand the purpose of our research better. Thank you!

We are very grateful to the reviewer for your careful and conscientious review. It has helped a lot to revise and improve the paper. We express our great gratitude and appreciation to you for your willingness to take the time to read the revised version of the article once again.

Best wishes,

Zhang Yuhao

Author Response File: Author Response.pdf

Reviewer 2 Report

A carbon tax is a tax levied on the carbon emissions required to produce goods and services. Under a carbon tax, the government sets a price that emitters must pay for each ton of greenhouse gas emissions they emit. Businesses and consumers will take steps, such as switching fuels or adopting new technologies, to reduce their emissions to avoid paying the tax. Carbon taxes are intended to make visible the "hidden" social costs of carbon emissions, which are otherwise felt only in indirect ways like more severe weather events. As such, this study simulate the dynamic impact of implementing carbon tax policies under different carbon tax prices on China's carbon emissions, GDP, and residents' income, and whether the unification of environmental and economic benefits can be effectively achieved. Analysis indicates that the imposition of carbon tax helps reduce carbon emissions and has a significant effect on carbon reduction. However, in the short term, it has a negative effect on the development of the economy.

However, my assessment of the article on the China's carbon tax system under carbon neutral target is negative for a number of reasons listed below. The determinants of carbon tax system under carbon neutral target in China is very complex. The real issue with the research frameworks is that the finding is too simplistic, which leaves too much of the work to be done. As such there are more evidences to be found for supporting the possible conclusions and that is what I would like to see occur in the future study.

Author Response

Dear Reviewer,

Thank you very much for your review of our article and your careful and rigorous review comments. After more than half a month of our revision, the article has been majorly revised. The abstract, keywords, theoretical study and empirical analysis have been optimized, added and deleted. We will now explain to you the major revisions. Please refer to the attached "Respond letter" for a detailed description of the whole article.

Thank you very much for your suggestions on what we need to do in the future. Because of space issues, we did not bring in other variables that were analyzed through empirical simulations before. In fact, it is possible to simulate the vast majority of policy shocks to economic variables through the CGE model simulating macro as well as micro social accounting matrices. Therefore, we have further strengthened the theoretical framework study in addition to the revision. We also include more variables related to environmental and economic benefits in the empirical analysis results. In this way, we explore whether the carbon tax policy can effectively realize the double dividend effect. In addition, the policy recommendations are supplemented with more experiences from the international practice and the inspiration from the empirical results.

We are very grateful to the reviewer for your careful and conscientious review. It has helped a lot to revise and improve the paper. We express our great gratitude and appreciation to you for your willingness to take the time to read the revised version of the article once again.

Best wishes,

Zhang Yuhao

Author Response File: Author Response.pdf

Reviewer 3 Report

The article raises a very important issue of CO2 emissions, in the context of global warming, as well as fees for it. The authors rightly write that in a short time, fees for this can cause an economic slowdown. However, the aim is a strategy to reduce global temperature through local actions. Chapter 6.2.(3) lacks an incentive to reduce emissions in modes of transport, e.g., by charging more for CO2 or NOX in exhaust gases above the limit. This may be related through, for example, a local tax on means of transport, charges for poisoning the environment from stationary sources of exhaust emissions, etc. I suggest you add this. In one sentence.

Author Response

Dear Reviewer,

Thank you very much for your review of our article and your careful and rigorous review comments. After more than half a month of our revision, the article has been majorly revised. The abstract, keywords, theoretical study and empirical analysis have been optimized, added and deleted. We will now explain to you the major revisions. Please refer to the attached "Respond letter" for a detailed description of the whole article.

First of all, thank you very much for your recognition of the research topic of our paper. We have also further improved the theoretical framework and empirical study of our article based on your suggestions. We also put the impact on the "transportation" sector you mentioned in the empirical study. We have investigated whether there is an impact on the output of the "transportation" sector if a carbon tax is imposed. The final simulation results found that there is a significant reduction in output. Therefore, we conclude the paper by mentioning, as you said, that the subsidies from the carbon tax should be further strengthened in order to mitigate the possible short-term economic impact of the implementation of the carbon tax policy.

We are very grateful to the reviewer for your careful and conscientious review. It has helped a lot to revise and improve the paper. We express our great gratitude and appreciation to you for your willingness to take the time to read the revised version of the article once again.

Best wishes,

Zhang Yuhao

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Agree to publish

Author Response

Dear Reviewer

Thank you very much for your approval of our revised article. We will further standardize our articles and continue to make improvements. We appreciate your comments and help with revisions! Thank you very much!

We wish you all the best！

Reviewer 2 Report

My assessment of the article on the China's carbon tax system under carbon neutral target is negative for a number of reasons listed below. The determinants of carbon tax system under carbon neutral target in China is very complex. The real issue with the research frameworks is that the finding is too simplistic, which leaves too much of the work to be done. As such there are more evidences to be found for supporting the possible conclusions and that is what I would like to see occur in the future study.

Author Response

Dear Reviewer

Thank you very much for your reply comments once again. After our many revisions for more than half a month, we have added and deleted a lot of content and detailed our content in our last reviewer response. However, we found your review comments in this time, exactly the same as last time, and I don't know if you are not satisfied with our revisions or have other problems. We want to explain to you further about our research work.

Although it may seem to you that we have not done enough research, we have spent a lot of work on modeling and leveling the research model for this paper. Since the carbon tax policy has not yet been implemented in China, we were not able to simulate it using traditional econometric models. Instead, a computable general equilibrium (CGE) model is applied and further model construction is carried out. In our empirical study, once the model is built, all related to macroeconomic variables and microeconomic variables can be computed. But in this paper, we want to study whether carbon tax can be a double dividend effect now. Therefore the simulation results of the economic indicators related to it are selected for graphical illustration. This is exactly the logic of our research in this paper on empirical studies. The relevant model codes and the selection of variables are further explained in the text and the appendix, respectively.

Thank you very much for your review comments. If you have any further questions, please feel free to contact us. Thank you!

Best regards,