Research On Non-tax Revenue Of Chinese Local Governments And Enterprise Investment

Since 2011,ever increasing non-tax revenue of Chinese local governments has been putting heavy burden on enterprises and reducing their willingness for further investments.This phenomenon has already raised great concern among public.Enterprises are the principal contributors to governments' non-tax revenue,thus excessive high level of non-tax burden will reduce their profit retention and influence their investment behaviors.In fact,most literatures are focused on the cause of non-tax revenue expansion,however,there is a short of systematic empirical evidence of how non-tax burdens affect enterprise investment.This paper use the proportion of non-tax revenue on fiscal revenue and GDP as a measure of enterprise non-tax burden.Based on the 2007-2016 provincial dynamic panel data with system GMM model,this paper exams the macro factors influencing non-tax revenue ratios and the effect of non-tax revenue ratios on enterprise investment.The empirical results show that:(1)There is an obvious regional difference of non-tax ratios in China.More developed eastern provinces are less dependent on non-tax revenue and thus put lighter burden on enterprises;(2)Non-tax revenue ratios have a significant negative effect on FDI,while not effective in influencing private investment.Specifically,after the abolishment of education surcharges on foreign enterprises in 2011,the provinces with heavier non-tax burdens are facing much greater FDI outflows than those with lighter non-tax burdens;(3)Statistics of sub items of non-tax revenue show that special receipts and income from state-owned resources(assets)are currently the primary drivers of non-tax expansion.These two items have the characteristics of a wider coverage of enterprises charges and greater influence of enterprise investment.The results of this paper not only have its theoretical contributions,but also have the following policy implications: FDI outflows is closely related with the rapid growth of local government non-tax revenue ratios.It is proposed that governments should adopt structural non-tax reduction policies,with a focus on eliminating unreasonable charges in special receipts and income from state-owned resources(assets),to create a better business environment for the enterprises.