| Improving the quality of China’s economic growth is an important theme of China’s economic development in the new era in the background of supply-side reform.Industrial firms are the most important and fundermental units for supply-side reform and high quality development.Tax rate adjustment is one of the main driving forces of supply-side reform.Value added tax(VAT)is an important source of tax for China and an important tax burden for enterprises.However,The VAT rate actually borne by the enterprise,that is,the effective VAT rate,varied among enterprises due to factors such as industry characteristics,enterprise characteristics,and differences in taxation efforts.in the face of increasing uncertain economic situations both domestic and abroad,only the companies which survive in a severe and complex external environment can consider long-term decision-making issues such as efficiency improvement and product quality improvement,thus maintaining the sustainability of their enterprises and ultimately improving the quality of China’s economic growth.Based on this,this paper analyzes the effect of the effective value-added tax rate at the enterprise level on the enterprise’s own duration,thereby providing a micro-empirical evidence and useful suggestions for the relationship between China’s supply-side reform and high-quality economic development.From the perspective of survival time,we study the effect of effective VAT rate on the sustainability of enterprise development.Compared with the existing literature,our contribution is threefold.First,from the perspective of research issues,a large number of literatures have studied the impact of tax burden and tax system on the economic performance of Chinese enterprises,but only if enterprises have a longer duration can they consider long-term issues such as enterprise growth and development.However,few literatures have examined the effect of tax burden on the enterprise’s duration,especially the effect of effective VAT rate on the enterprise’s duration.This paper will enrich the literature on the impact of taxes on corporate behavior.Second,from the perspective of research,existing literatures have examined the determinants of the duration of Chinese enterprises from different perspectives,but few literatures have covered the research perspective of effective VAT.Therefore,this paper will also enrich the literature on the determinants of the duration of enterprises.Third,we quantify the impact of effective VAT on the domestic duration of enterprises systematically and comprehensively.We sequentially examines the effect of effective VAT rates on the duration of enterprises and the duration of corporate trade relations,and studies the impact of macro tax burdens on the duration of trade relations based on cross-border data.Focusing on the subject of the effect of effective VAT rate on the enterprise’s duration,this paper mainly studies four issues by using literature review,theoretical analysis,typical facts extraction,and quantitative empirical analysis methods,and in the logical order from closed to open,from special to general.Firstly,we analyze the mechanism of tax rate impact on firm survival.Secondly,we examined the effect of effective VAT rate on the duration of enterprises by using China Industry Business Performance Data.Thirdly,we investigated the effect of effective VAT rate on the duration of trade relations between Chinese enterprises by matching China Customs trade data with China Industry Business Performance Data.Finally,we studied the influence of the macro-tax burden on the duration of the trade relations between the countries in the world by using the data of the HS-6 digital world trade data and the macro-tax burden data of the countries in the world.Having established a link between tax rates and the duration of enterprises,the core conclusions of this paper are summarized as follows.Firstly,the firms’ profit is determined by productivity,entry cost and production fixed cost;the VAT will effect the productivity,R&D investmet and financial constrain,which will enventually effect firms’ survival.Secondly,the effective value-added tax rate at factory level has gradually declined over time,but the degree of reduction varies due to the heterogeneity of industry characteristics,enterprise characteristics,and regional characteristics.Thirdly,in a closed economy,the effect of the effective value-added tax rate on the enterprises’ domestic survival time displays a "inverted U-shaped"pattern.Neither low nor high effective value-added tax rate is conducive to the survival time of enterprises.Fourthly,the increase of effective value-added tax rate will reduce the duration of Chinese enterprises’ trade relations in an open economy,which is mainly caused by the fierce competition in the international trade environment and the different samples of export enterprises and domestic enterprises.Fifthly,from the cross-border perspective,an increase in the macro tax burden lead to the decline of trade relations’ duration.This effect is more significant for products with high dependence on external financing,highly contract intensive,and high technical sophistication,implying that macro tax burden will also affect trade and production structure through the survival time channel.Finally,with the intermediary effect model and cross item analysis,we find that tax burden may have caused an impact on survival time via several mechanisms,including:(i)production efficiency(ii)innovation input or output(iii)financing cost.Based on the above conclusions and considering China’s reality,we believe that China’s tax rate adjustment should have the characteristics of accuracy.The government should use the tax policy instrument properly to affect firms’ behavior.However,from the perspective of international competition and budget balance constrain,although reducing tax rate is feasible,we should examine the international externalities of tax rate reduction as well as fiscal balance.Otherwise it is not conducive to the healthy and sustainable development of the world economy. |
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