An Empirical Study On Tax Collection Rate And Local Financial And Economic Growth

Since the reform of the tax-sharing system, local fiscal revenue has entered a period of rapid growth, with the rapid growth of China’s economy, which strengthens local fiscal capacity. However, under the condition of the existing tax system, the size of tax revenue, which is an important part in the local fiscal capacity, depends not only on the tax ability decided by economy, economic structure, and economic benefit, but also on tax collection ability decided by collection and management skills, and taxpayer awareness. Tax ratio is an important indicator in the measurement of tax collection ability. Therefore, tax ratio, local fiscal capacity, and economic growth are in the relationship of mutual promotion and restriction. The improvement of tax ratio and economic growth speed, can promote the ascension of local fiscal capacity; in turn, increasing amount of local fiscal capacity provides relatively sufficient capital for government expenditure, government purchase, government investment, and social insurance for citizens, which further promote the increasing of tax ratio and economic growth speed. Then, among the several factors that contributes to the continuous increase of local fiscal capacity, in what extent do economic growth and tax ratio contribute to local fiscal capacity?To analyze the relationship between tax ratio, local fiscal capacity, and economic growth more profoundly, this paper take Yunnan Province as an example to study the relationship between the above stated factors, by evaluating tax ratio from 1999 to 2012, selecting related indicators for the measurement of local fiscal capacity and economic growth, and establishing an econometric model. Moreover, in order to enrich the conclusion, this paper further analyzed the relationship between fiscal self-sufficiency rate and tax ratio of Yunnan Province, to inspect the relationship between transfer payment dependence degree and the foresaid two factors.The result shows that the tax ratio of Yunnan Province is in steady increase, which is generally higher than the national level. In addition, empirical analysis shows that economic growth and the tax ratio of Yunnan Province have significant positive impact on local fiscal capacity; while transfer payment does not show the negative impact to tax ratio of Yunnan Province. With the increasing of transfer payment from central government, tax ratio is still on the trend of gradual rising. Based on the above empirical results, this paper proposes some corresponding countermeasures and suggestions for the coordinated development of tax ratio, local fiscal capacity, and economic growth in Yunnan Province, including: strengthening tax collection and administration to improve tax ratio; keeping stable and fast economic growth; expanding the transfer payment scale, and preventing the negative stimulus from transfer payment to tax ratio.