Abstract: In recent years, the central government has attached great importance to the construction of ecological civilization and the development of the environmental protection industry. At the same time, local governments are facing greater fiscal stress. The contradiction has become more prominent after replacing the business tax with a value-added tax. Local governments are faced with the dual pressure of finance and performance evaluation, and may adopt measures to reduce the purchase price of environmentally friendly products to reduce the financial burden. Based on the data of environmental protection listed companies from 2009 to 2017, this paper uses the fixed effect model and continuous DID method to study the impact of rising local fiscal stress on the environmental protection listed companies’ performance. The study finds that the rise in local fiscal stress has a significant negative impact on the performance of listed environmental companies. In addition, the transformation from business tax to value added tax intensifies the local government’s fiscal stress, which in turn has a significant negative effect on the performance of environmental protection listed companies. In order to build an ecological environment, the Chinese government should strengthen the supervision and restriction of local governments, perfect the local taxation system, and support for environmental protection enterprises.