| In 1994,the central government devolved part of the power of tax collection and administration and fiscal expenditure to local governments.In 2002,China implemented the reform of enterprise income tax sharing,which changed the enterprise income tax and individual income tax from the original principle of levying and dividing income according to territoriality to the central and local tax revenue sharing.The reduction of the share of enterprise income tax directly reduces the fiscal revenue in the local government budget.At the same time,the state has introduced a series of VAT tax reduction policies,which further reduces the tax revenue of local governments.In contrast,the fiscal expenditure power of local governments has not changed,and the financial pressure faced by local governments has become increasingly prominent.In order to make up for the gap of fiscal revenue and expenditure,local governments compete in tax competition to obtain scarce financial resources through tax preferences,tax burden adjustment and tax base contention,so as to promote local economic development and increase fiscal revenue.However,such non-cooperative competition among local governments may lead to the supply of public goods such as environment deviating from the optimal level of society.Based on the perspective of financial pressure,this paper discusses the tax competition behavior of Chinese local governments in response to financial pressure and its impact on environmental quality from the perspective of tax base.In the case of limited financial expenditure,economic construction investment and environmental protection expenditure often show a mutually exclusive relationship.It is difficult for local governments to achieve the coordinated development of economy and environment.At this time,the preference of government’s fiscal expenditure decision-making will directly affect the local environment.In the case of limited regional resource endowment,tax competition among local governments usually manifests itself in protecting key tax source enterprises,solidifying local resources,expanding tax base and increasing fiscal revenue by competing for liquidity factors of production.However,in the process of tax competition,environmental pollution control is not the primary goal of local government financial decision-making.On the basis of theoretical analysis,the paper uses panel data of 30 provincial regions(excluding Tibet)in mainland China from 2004 to 2014 to construct a comprehensive index of environmental pollution by principal component analysis.Using spatial Durbin panel econometric model,this paper empirically examines the impact of inter-regional tax competition on environmental pollution from the perspectives of enterprise income tax and value-added tax.On this basis,the interaction between fiscal pressure and tax competition is introduced to further investigate the direct,indirect and total effects of fiscal pressure,tax competition and environmental pollution.The main findings of this paper are as follows.There is obvious spatial correlation between regional environmental pollution.The aggravation of regional environmental pollution will make the environmental pollution level of space-related areas improve,and the improvement of environmental quality of space-related areas will be conducive to the improvement of local environmental quality.Whether it is inter-regional income tax competition or value added tax competition,its interaction with fiscal pressure is significantly positive in the test of direct effect,indirect effect and total effect.The conclusion of the paper indicates that under the influence of fiscal pressure,inter-regional tax competition not only brings adverse effects to the local environment,but also makes spatial correlation.The environmental quality of the area tends to deteriorate.The conclusion of this paper provides policy implications for further standardizing tax competition among local governments in China and promoting the coordinated development of economy and environment. |
