Public finance and environment: correlations of selected taxes with pollution and CO2 emissions in China between 1999 and 2006

China's breakneck economic growth in recent decades was accompanied by visible environmental pollution and degradation. In the same period, tax revenues also increased sharply. Replacing existing taxes with the environment taxes called for by many environmental economists seems a promising solution to its environmental problems, but this needs more insight into the relationship of the existing taxes with the environment. The study of the relationship of the taxes with pollution and CO2 emissions may offer the needed knowledge. This article will first explore the changes in China's pollution and CO2 emissions and in selected tax revenues, and then examine the correlations between these changes. The findings of this study may help one to better understand the complex relationship between China's public finance and its pollution and degradation, and help justify and substantiate more effective and viable incentive-based solutions so that economic activities in the transition to a green economy may change the way they impact the environment.