Policy Innovation in Volatile Organic Compound Control: International Experience and Implementation Readiness of China’s VOC Environmental Protection Tax Pilot

As an emerging market-based instrument for air pollution control, China will begin levying an environmental protection tax on volatile organic compounds (VOCs) on a pilot basis on 1 January 2027 under the Pilot Measures for Levying Environmental Protection Tax on Volatile Organic Compounds. The institutional framework has been settled, but supporting rules such as source-category calculation methods and provincial applicable tax amounts are still pending. To support implementation, this study reviewed the operating rules of VOC-related taxes, charges and economic incentives in the South Coast Air Quality Management District of the United States, Switzerland, Japan and the Taiwan region of China, and compared them item by item with China’s pilot scheme along four dimensions: the location of the price signal and tax base, scope and thresholds, quantification and verification, and rates and incentives. The reviewed cases represent three approaches—emission-stage charging, supply-side taxation and investment-side incentives—and their performance depends mainly on the rules for identifying the tax base, quantifying emissions, verifying filings and designing incentives. China’s pilot shares comparable mechanisms with these systems in emission-stage taxation, source-specific quantification and deemed assessment for misreporting. At the same time, it introduces institutional innovations that connect the new tax with existing environmental tax, pollutant discharge permitting and performance grading systems: the deduction of 18 separately taxed VOC species after source-category aggregation, the separate taxation of VOCs as a whole, and tax relief linked to environmental performance grades. Implementation preparations should give priority to issuing source-category calculation methods and verification feedback rules, and use pilot data to evaluate simplified administration for small emitters, provincial tax amounts, permit-based taxpayer identification and the tax application of performance grades.