Facing the aggravation of the global climate problem, the need to mitigate climate change and reduce carbon dioxide emissions has increased globally [
1]. Reducing carbon emissions and achieving green development have become the goal of global consensus. It is, therefore, vital to expand the methods, mechanisms, and policies of carbon emission reduction. The central government has been increasing its efforts to assess the local environment in the context of emphasizing high-quality economic development. Green taxation, as one of the government’s means to protect the environment, can effectively control pollution emissions and regulate the mode of economic development. Fiscal decentralization, as an important part of China’s economic system reform, is an important system to ensure sustained and rapid economic development. Therefore, exploring changes in Chinese-style fiscal decentralization is critical to assessing the impact of green taxes on CO
2 emissions. How to formulate an appropriate green tax system according to the current situation of China-style fiscal decentralization, while taking into account the growth of economic benefits and environmental performance, these environmental issues have brought new challenges to China’s development.
There is a great deal of debate about whether the implementation of green taxes will benefit the improvement of environmental pollution. Lawton (2016) introduced the theory of green taxation into the practice of carbon emission reform, arguing that taxation can promote carbon emission reform [
2]. Cui Yafei and Huang Shaoan (2019) constructed the index of green sensitivity, classifying the degree of greening of the tax system into four quadrants—dark gray-green, light gray-green, light green, and dark green—which increases the green incentive impact of the related environmental tax. According to an empirical examination, the degree of greening of China’s taxation system is low, only occurring in the light gray-green area of the first quadrant, and the environmental protection effect is weak [
3]. Zheng Guohong (2017) developed a Real Business Cycle (RBC) model, utilizing goods tax, carbon tax, and other taxes to explore the green effect of various taxes. The findings indicate that taxes influence carbon emissions by influencing the allocation of labor and capital, while the carbon tax rate has a direct impact on energy savings and emission reduction in enterprise production and activities [
4]. Fan Dan (2018) pointed out that environmental taxes and fees have double dividends, playing a strong role in promoting the improvement of green technological innovation while reducing pollution. Environmental regulations that are sensible and stringent can encourage technological advancement and have positive effects on the economy and the environment [
5]. Fu Sha and Wang Jun (2018) examined the economic growth situation of 30 provinces in China from 2001 to 2015 and presented narrow and wide indicators of the “green tax system”. The results revealed a U-shaped association between the severity of the environmental tax and China’s carbon dioxide emissions [
6]. Some scholars have studied the effect of a green tax on carbon emissions in different ways. For example, Zhou Di (2021) integrated green tax, industrial structure, and carbon emissions into a unified research framework. The green tax has a threshold effect between industrial structure and carbon emissions [
7]. Zhang Hua (2014) presented a “U-inverted” curve to represent the direct relationship between environmental legislation and carbon emissions. In the transition from weak to robust environmental regulation, the effect changes from “green paradox” to “forced emission reduction” [
8]. Previous research on the effects of fiscal decentralization on environmental deterioration has been based on different research perspectives or different statistical indicators of fiscal decentralization, with the conclusions drawn by scholars also being diversified. Most researchers believe that fiscal decentralization will lead to increased environmental pollution. The traditional environmental federalism school, represented by Oates (2002) [
9], believes that the decentralized regulatory environment will produce the phenomenon of “competition to the end” under the system of fiscal decentralization. To retain promising enterprises, local governments will usually relax environmental regulatory standards and plan for enterprises that discharge pollutants, resulting in the further deterioration of environmental quality. Domestic scholars, such as Li Yanhong (2020) [
10], believe that enhancing the fiscal sovereignty of local governments is not beneficial to lowering carbon emissions. As a result of the domestic fiscal decentralization system and the mechanism for promoting government officials, local governments sacrifice public goods with positive environmental externalities to support the development of high-carbon industries with higher economic benefits when the degree of local fiscal autonomy increases. Tan Zhixiong and Zhang Yangyang (2015) [
11] found a substantial negative association between fiscal decentralization and environmental pollutant emissions using the input-output model. Current research on the influence of green tax income on our carbon emissions is fairly limited from the standpoint of fiscal decentralization; the majority of the study depends on government action. Zhang Pingping (2018) [
12] emphasized that, under the framework of China’s fiscal decentralization system, the fundamental effect of fiscal decentralization on pollutants is contingent on whether local governments can continue to safeguard the environment, which supplements the existing research on fiscal decentralization and pollution emissions. To sum up, most scholars, at home and abroad, hold a positive attitude toward the role of the green tax in pollution reduction and agree with the necessity of levying the green tax. Numerous empirical studies on the environmental effect of green taxes have been done by scholars. Some empirical results demonstrate that green taxes do indeed play a role in pollution reduction [
13,
14].
However, some investigations show that the environmental protection tax’s influence on decreasing environmental pollution is insignificant and has not achieved the desired results, and that its impact on reducing emissions needs to be further studied [
15]. The majority of the discussion about green taxes and carbon emissions has focused on environmental regulation or government competition, as well as the medium through which green taxes affect carbon emissions [
16]. However, there are few studies on the impact of green taxes on the fiscal decentralization of carbon emissions, and there is a lack of a comprehensive overview of the relationship between fiscal decentralization, green taxes, and carbon emission governance, as well as the joint impact of green taxes and fiscal decentralization on carbon emission reduction. In addition, the definition of “green taxes” has been very controversial, and this paper redefines “green taxes” according to the specificity of the research object of carbon emissions. The paper’s potential marginal contributions may be explained as follows:
The taxation system is a manifestation of fiscal decentralization, particularly in China’s current political context. Since carbon emissions are closely related to government regulation, most previous studies on green taxation and carbon emissions have explored the impact on carbon emissions of different kinds of green taxation from the perspective of environmental regulation or government competition, and very little literature has explored the relationship between green taxation and carbon emissions from the perspective of fiscal decentralization, in which the moderating role of fiscal decentralization, in this regard, deserves attention. In this paper, we try to investigate whether central government fiscal decentralization has an interactive relationship with green taxation of carbon emissions. Therefore, based on theories such as “double dividend”, “green paradox”, and “mandatory emission reduction”, this study uses the spatial Durbin model to investigate the interference of the level of economic development on the deviation of local governments from environmental protection, to reveal the interaction between fiscal decentralization and green taxation on carbon emissions, and to propose innovative countermeasures to reduce carbon emissions, in combination with empirical analysis. Most of the existing studies on the impact of taxation on carbon emissions start with a single environmental protection tax, a carbon tax, or the whole green taxation system [
17]. This paper is based on the existing green taxes related to carbon emissions. The eight green taxes are divided into two categories, according to the way they directly or indirectly affect carbon emissions, and the effects of the two types of green taxes on carbon emissions are discussed separately. The quantitative arguments are enhanced based on the large amount of data obtained.