The Research On The Effect Of Tax Arrangements On China’s Regional Economic Development And Its Policy Optimization

Since the reform and opening up, China’s regional economy has maintainedsustained and rapid growth, which work together to create the "China miracle".However, with the high-speed regional economic development, various developmentproblems have also appeared: ecology has been severely damaged; environmentalpollution is worsening; development imbalances between regions and between urbanand rural have become increasingly prominent; the gap between rich and poor andinequitable distribution continues to expand; Social security and public services isseriously lagging behind. These problems have seriously affected the sustainabledevelopment of China’s regional economy and society. The root cause of theseproblems is extensive, low-end, non-balanced economic development oflong-standing. Therefore, in order to ensure the sustainable development of China’sregional economic and society and solve these contradictions and problems indevelopment, we must fundamentally change the way of the region’s long-standingeconomic development.Changes in ways of regional economic development, mainly refers to changefrom the development mode which is traditional extensive, epitaxial and focusing onthe amount to the one which is intensive, content type and focusing on the quality.Specifically, changes in ways of regional economic development mainly reflected inthe following four aspects: The first one is the transformation of economicdevelopment momentum which should rely on the innovative but not the resourceinputs. The second one is the transformation of economic structure which should beadvancemental and coordinational but not low-end and uneven, and economicstructure mainly reflected in the adjustment and optimization of industrial structure.The third one is the transformation of economic development effects which should befocusing on economic and ecological environment but not with ecologicalenvironment as a cost. The fourth one is the transformation of economic developmentgoals which should be focusing on people’s needs, livelihood happiness and sharingthe fruits of development but not only focusing on GDP’s growth and expansion ofwealth, and equitable distribution of income is a fundamental indicators which reflectin changes of economic development goals.In many factors constraining the changes of regional economic developmentmode, tax arrangements play an important role which is the basic tools andinstruments of governance and macro-control. By reasonable tax arrangements, thegovernment effectively regulate the distribution of related subjects’ benefits,incentives or constrains the economic subjects’ behavior choices and thus affect the development mode of the regional economy. As an institutional arrangement by whichthe government get legitimate revenue, regulate social resource allocation andeconomic operation, tax arrangement mainly includes what, how much and how taxeslevied by the government which reflected in tax structure, tax rates, macro tax burdenand so on. On the one hand, tax arrangement provide financial support for the supplyof government’s public goods and policy implementation of promoting economicdevelopment mode shift, by adjusting the distribution of national income betweennational financial and market, ensuring the national revenu e. On the other hand, taxarrangement regulate related subjects’ behavioral choices correlated with regionaleconomic development mode. Specifically, the regional economic development modechanges’ impact on tax arrangements would be achieved by affecting regionalinnovation development, regional industrial restructuring, the sustainabledevelopment of the regional ecological environment and regional income distributionfairness.Firstly, basing on a comprehensive review and comment of related literature, thispaper make theoretical analysis of tax arrangement’s regulatory mechanism and means,reveal the path and mechanism of tax arrangement’s impact on regional economicdevelopment mode shift, from content and specific performance of regional economicdevelopment mode shift. Under the perspective of economic development mode shift,the control means of tax arrangements contain three aspects, that is micro-marketregulation, meso-industry regulation, and macroeconomic regulation and control offiscal policy. Micro-market regulation is mainly reflected in its adjustment on cost ofproduction factors, the output cost ratio, technological advances and using costs ofresource. Meso-industry regulation is mainly reflected in differentiation of averageprice of the product, the marginal cost of production rate and balanced output indifferent industries under the control of micro-market regulation. Macroeconomicregulation and control of fiscal policy mainly is reflected in the positive and negativeeffects of tax, i.e., on the one hand, the cost of the tax increase market players; on theother hand tax provides financial support for government spending optimiz ing marketenvironment. By the above means of regulation, tax arrangement have an impact onchanges of regional economic development mode, its impact path and mechanism is asfollows: favorable tax arrangements and government procurement supported by taxare conducive to enhancing the technological innovation of market players, andpromote technological progress, changes momentum of the overall economicdevelopment; Preferential tax policies or heavier tax burden Generate positive ornegative impact on market players having a common feature, and then have a positiveor negative impact on the constituent elements; Sustainable development of ecologicalenvironment is an important outside performance of economic effect’s change, theinstitutional mechanism of environmental issues’ internalizing externalities are the main means of tax arrangements’ affecting the change of development effect. Animportant part of economic development goals’ change is to achieve regional revenuefair, taxation of income source, tax passed and social security are important means ofachieving regional income equity and changing economic development goals.Thereafter, based on the inspection of the state of regional taxation arrangementsand the shift of economic development mode, this paper empirical analysis and testthe impact of the path and mechanism of regional innovation and developmen t,regional industrial structure adjustment, sustainable development of the regionalenvironment and regional fair of income distribution exerted by tax arrangements.The results showed that:(1) The current tax burden has a positive influence onregional innovation and development than its negative effects, that help to promoteregional innovation and development. In terms of tax structure, the higher theproportion of total turnover tax allowance of regional development, the relativelyhigher degree of innovation. In regional term, the proportion of eastern region’scorporate income tax and the corresponding innovation output was significantlynegatively correlated.(2) The impact of tax arrangements for industrial restructuringis mainly based on three levels: firstly, the micro level. Turnover tax and income taxon high-class industrial structure showing a U-shaped path influence, showing ainverted U-shaped impact path to rationalization of industrial structure. Meanwhile,the collection of resource tax will do harm to high-class and rationalization ofindustrial structure. Secondly, the middle level, the secondary and tertiary industriestaxes have a U-shaped impact on Industry Structure Upgrade, the increase of tax fromsecondary industry is not conducive to industrial rationalization, and the taxes oftertiary industry showing inverted U-impact path to rationalize on industry structure.Thirdly, the macro level. The Macro tax burden showing a U-impact path onrationalization and high-class of industry structure. Regionally, turnover tax andincome tax effects of each variable on the Industry Structure Upgrade moresignificantly to the east which has more perfect market mechanism. In the central andwest which export the majority of labor, the increases of turnover tax and income taxincrease the influence of tax passed to the cost of labor costs.(3) For decrease the costfrom taxing, the firms which have heavier macro tax burden externalized costs ofenvironmental pollution which isn’t conducive to the sustainable development of theregional ecological environment. The levy of resource tax is favor to the sustainableecological environment of the region. The relatively low level of economicdevelopment regions, macro tax burden has a more significantly ne gative impact onsustainable regional ecological environment, which is converse at the relatively highlevel of economic development regions.(4) Overall, the tax did not play a role inregulating the distribution of income. Personal income tax and regiona l income gaphas shown a positive correlation, so the levy of income tax on high-income groups is not perfect, which is not enhance adjustment function to the personal income taxrevenue gap. Consumption tax and the income gap presents positive relationshi p, withthe increase in property tax, the income gap narrowing as well.At last, according to previous theory and empirical analysis, this paper putforward corresponding suggestions based on the comprehensive inspection of ourcountry’s tax arrangement. In terms of regional innovation and development, set updifferentiated tax arrangements to promote regional innovation and development in allregions, maintain a reasonable tax burden and keep its coherence and continuity,optimize and adjust tax structural for innovation and design rational tax arrangementsbased on technology spillover theory. In terms of industrial structure adjustment, setreasonable tax intervals of factors for different regions, perfect the tax policy thatpromote independent innovation and technological progress, rationalize resource taxpolicy for production areas with abundant resources, and optimize regionaldifferences in tax arrangements about VAT and business tax, rational make use of taxincentives and other measures to promote the optimization and adjustment ofindustrial structure. In terms of regional sustainable development, add environmentaltaxes to improve environmental quality, achieve various tax rates’ differentiatedadjustment mechanism in deferent regions, build more flexible and effective policy oftax credit, optimize tax improve tax collection and utilize the institution to ensure theimplementation of environment-related tax policy and promoting the circulareconomy vigorously. In terms of regional income fairness, optimize the tax structureand promote income fairness, perfect specific taxes to make sure it plays a role inregulating income gap, levy tax in favor of regulating the distribution of income,improve and adjust the tax collection system to promote tax regulation.