Carbon Tax Revenue Potential: The Role of Environmental Performance, ESG Disclosure and Firm Size
Abstract
Climate change has become a major global challenge that affects environmental sustainability and fiscal policy development, encouraging governments to implement carbon pricing instruments such as carbon tax to reduce greenhouse gas emissions. However, empirical evidence explaining how corporate sustainability practices influence potential carbon tax revenue remains limited, particularly in cross-country contexts. This study aims to examine the effect of green accounting, sustainability report disclosure, and environmental performance on potential carbon tax revenue, with firm size as a moderating variable, using energy sector companies in Indonesia, Malaysia, and Thailand during the period 2020–2024. The study employs a quantitative approach using secondary data obtained from the Refinitiv database, resulting in 90 balanced panel observations selected through purposive sampling. Data analysis is conducted using multiple linear regression and Moderated Regression Analysis (MRA) to examine both direct and moderating relationships between variables. The results indicate that environmental performance has a positive and significant effect on potential carbon tax revenue, while green accounting and sustainability report disclosure do not show significant effects. Firm size has a positive effect on potential carbon tax revenue but does not moderate the relationship between sustainability practices and carbon tax exposure. These findings indicate that carbon tax exposure is more strongly associated with actual environmental performance than disclosure-based sustainability practices, highlighting the importance of improving operational environmental efficiency to support environmental fiscal policy effectiveness.
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