A Study of Energy Tax Policy Decision Model Based on Marginal Cost Constraint

Nowadays, it is universally accepted that the issue of energy shortage is increasingly serious. As a consequence, this modern-day crisis has greatly restricts the development of Chinese economy. This essay built an analytical model of tax policy of Chinese sustainable energy for the Chinese transportation. This model based on system dynamics, considered influences of many factors including energy price, interest, energy tax rats, and marginal cost on the willing of project investment, and emphatically studied the supporting function of national energy tax police to the strategic target of energy. It predicts that the energy tax rates would increase from 28% (in 2005) to 40% (in 2011) and then gradually reduce to 33% (in 2020), after confirming the annually optimum energy-saving target (5%) from 2005 to 2020. The gross transportation energy consuming, the relative CO₂ emissions and the tax-inclusive price of crude oil will increase from 120 MT, 364.57 MT and 611.78 USD/T, in 2005 to 321.8 MT, 977.78 MT and 1533.99 USD/T in 2020 respectively. The application indicates that the analytical method could achieve the energy-saving target and tax-rate scheme directly, thereby guiding the design of future finance and tax policy on sustainable energy.