Subject. This article highlights the need to coordinate actions on economic growth and environmental protection in order to achieve the optimal situation in the development of the Chinese economy. Objectives. The article aims to consider methodological tools for assessing the impact of green tax policies on economic growth by building a dynamic panel model of the quantity and quality of economic growth and green tax policy. Methods. For the study, we analyzed the economic literature and empirical research on environmental taxation, environment and sustainable economic development in existing theories of economic growth. The Cobb–Douglas production function and Barla and Perelman's research ideas were also used. Results. The article finds that the degree of environmentalization of China's tax system remains low. Both constrained and extended green tax policies have deterrent effects on economic growth, and environmental decentralization does not contribute to the sustainable development of the economy, while weakening this adverse effect. Conclusions. China's tax reform needs to be improved to meet the real needs of green advancement. It is important to accelerate the transition from a double taxation system to a triple taxation system, which will create a multi-level and perfect system of green taxation.
Keywords: green tax policy, economic advance, environmental decentralization
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