Abstract:Under pressures related to economic growth and environmental protection,
China isfacing an increasingly severe “environment–health–poverty” trap risk. Fuel taxation
is generallyconsidered an effective policy to counter such a risk. Since 2009 China has raised
the fuel tax ratemany times to enhance tax reform. However, the effects of this policy remain
unknown. Therefore,it is vitally important to estimate the impacts of China’s current fuel
taxation policy on environment,public health and the national economy. As the first attempt
in existing literature on China, this paperbuilds a general equilibrium framework with the
feedback effect of public health on economy. Wefind that that the fuel tax policy benefits
the adjustment of the economic structure and improveshuman health; however, it is
detrimental to economic growth, public welfare and price stability.In this sense, it plays a
limited role in reducing the trap risk and might not be sustainable in the long term.
Key words:economic growth, environment–health–poverty trap, fuel tax, public health
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