Abstract: In the context of the high-quality economic development, leveraging tax tools to strengthen the rigid constraint on water resources and promote the green transformation of enterprises is crucial for the realization of the sustainable economic development. Taking the pilot implementation of water resources fee-to-tax reform in China as a quasi-natural experiment, this study conducts an empirical analysis of the impact of water resources fee-to-tax reform on the environmental performance of high water-consuming enterprises and its mechanism based on the micro-level data from A-share listed companies from 2012 to 2022 in Shanghai and Shenzhen Stock Exchanges. The results indicate that the water resource tax can significantly enhance the environmental performance of high water-consuming enterprises. The mechanism analysis reveals that the water resource tax can increase the tax compliance costs of the enterprises, and by incentivizing corporate green technological innovation their environmental performance can be improved. Meanwhile, this promoting effect exhibits heterogeneity. The enhancement of water resource tax on the environmental performance of the high water-consuming enterprises is more pronounced in the non-state-owned enterprises, the large-scale enterprises, and the enterprises with higher initial environmental performance. Therefore, in the future, the pilot scope of water resource tax should be expanded, the design of water resource tax rates should be improved, differentiated tax rates should be set while raising the minimum tax rate, the multi departmental cooperation should be promoted, the tax collection and management mechanism of water resources tax should be optimized, the tax incentives and supporting measures should be strengthened to leverage green technology innovation in enterprises, so as to improve their environmental performance and accelerate their green transformation.

Key words: water resource fee-to-tax, corporate environmental performance, high water-consuming enterprises, enterprise green innovation