The Incentive Mechanism of Preferential Tax Policies to the Environmental Protection Industry

The environmental protection industry (EPI) has high policy sensitivity and is influenced by many factors, but the policies incentives to EPI have not attracted enough attention. This paper studies the incentive mechanism of preferential tax policies (PTP) to EPI by the method of system dynamics (SD). The supply and market concentration degree (MCD) of EPI is employed as the observation variable, and the level of PTP is set to 0%-80% (intervals of 20%) to investigate the developmental trend of EPI. The results are as follows: PTP has a significant incentive effect to supply and MCD; the incentives of PTP to supply and MCD show decreasing and increasing scale effect respectively; Supply reaches the maximum on the level of 20% PTP.