Study On The Relationship Between Tax Competition And Economic Growth Of Provincial Local Government

The problem of tax competition has always been a hot spot for western scholars,because moderate tax competition can promote the effective allocation of resources,improve economic efficiency and improve the overall welfare of the society.Under the background of China's tax sharing system,local governments,although they do not have independent tax legislation and are not like the local governments of the developed countries such as the United States and Japan,can carry out complete tax and tax competition,but they can enjoy various preferential tax policies in specific areas,entrepreneurship,investment,high-tech,export and small and medium-sized enterprises.Besides,information incompleteness in tax collection and management makes local governments have larger activity space in tax competition.On the effect of tax competition on economic growth,scholars have not formed a unified opinion,showing three views: first,the tax competition has a positive effect on economic growth;the two is the negative effect of tax competition on economic growth;and three is the little correlation between tax competition and economic growth.Considering the background of China's tax sharing system,the rights of provincial governments are basically consistent and the independent rights of taxation are concentrated.Therefore,this paper takes the provincial government of our country as the object of analysis.What is the relationship between tax competition and economic growth at provincial level?Therefore,this paper uses the provincial panel data of China from 2008 to 2015 to make an empirical analysis on the correlation between local tax competition and economic growth.The results show that the total tax,business tax,value added tax,enterprise income tax,and urban maintenance and construction tax five types of tax competition are negatively related to economic growth,and tax competition has a significant inhibitory effect on the overall effect of the whole country.At the same time,from the sample regression results,there are regional differences in the effects of tax competition on economic growth.Among them,the competition of total tax and business tax has a significant negative effect on economic growth in the eastern andwestern regions,and the correlation between the two in the central region is not obvious;the value added tax and the urban maintenance and construction tax competition have a significant negative effect on the economic growth in the West,and the correlation between the two parties in the East and the central region is not obvious;the enterprise income tax competition have a significant negative effect on the economic growth in the eastern and western regions,and the central region is significantly positive.Generally speaking,the positive effect of provincial local government tax competition on economic growth is less than the negative effect,which hinders economic growth.Finally,according to the research conclusion,this paper puts forward relevant countermeasures and suggestions.