Analysis Of The Influence Of Industrial Agglomeration On Regional Tax Burden Difference

The specific fiscal decentralization system of China makes the tax rights highly concentrated in the central government,which makes the local government's power in taxation very limited.This leads to the fact that local governments in China cannot use the tax rate as the main strategic tool for tax competition.However,this does not mean that there is no tax competition between local governments in China.In fact,local governments in China can still carry out tax competition through some indirect means,such as implementing preferential tax policies,financial subsidies,and returning first.form.This shows that there is room for indirect tax competition between local governments in China.In the traditional theory of tax competition,fierce tax competition between local governments will lead to a continuous decline in tax rates,resulting in a “competition” competition result,and the tax rate will further decline to an inefficient state.The new economic geography combines the industrial agglomeration and the tax competition model,and has reached a conclusion that is different from the traditional tax competition theory: that local governments can avoid the fierce tax competition by collecting tax on the agglomeration created by industrial agglomeration..Due to the existence of agglomeration,local governments can increase the tax rate moderately without worrying that the tax rate will lead to enterprise outflow and capital outflow.New economic geography provides a new perspective and new explanation for the reality of tax competition in countries or regions.Regardless of the choice of local government as the main strategic tool for tax competition,the results of regional tax competition will ultimately be reflected in the differences in tax levels among regions.Therefore,this paper will study industrial agglomeration based on this idea.The impact of regional tax differences.The main purpose of this paper is to explore the impact of industrial agglomeration on regional tax burden differences caused by local government tax competition in the perspective of local government tax competition.This paper summarizes the relevant literature at domestic and abroad from three aspects of industrial agglomeration,tax competition and regional tax burden,and tax competition in which factors of industrial agglomeration are added,so as to have a comprehensive understanding and grasp of the research results in this field.The literature on industrial agglomeration focuses on the development of industrial agglomeration theory and the domestic multi-angle investigation of industrial agglomeration;the literature on tax competition and regional tax burden focuses on the construction of tax competition models and measurement of the degree of regional tax competition and the level of regional tax burden at domestic and abroad;the literature on tax competition that incorporates industrial agglomeration factors highlights the tax competition model under the new economic geography framework and discussions based on Chinese realities.Because the research object of this paper is the industrial agglomeration of China and the tax competition of local governments in China,this paper combines the status quo of industrial agglomeration and regional tax burden in China,and conducts preliminary investigation and data description based on China's actual situation.Based on the analysis of theoretical mechanisms,theoretical assumptions are proposed.Then,this paper uses the panel data of 30 provincial-level administrative regions in China from 2012 to 2016 to establish a multiple linear regression model,and uses the two-way fixed effect and instrumental variable method to empirically test the theoretical hypothesis.The multi-angle measurement of industrial agglomeration levels is carried out by using various indicators for measuring industrial agglomeration,and the local macro tax burden is used to measure the tax burden level of the region.By comparing the coefficient signs and significance levels of the national and eastern,central and western regions,the impact of industrial agglomeration on the tax burden level of different regions is examined.Investigate the impact of industrial agglomeration on different taxes by comparing the coefficient signs and significance levels of value-added tax,business tax,corporate income tax and personal income tax.The empirical results show that from a national level,industrial agglomeration has a significant positive impact on regional tax burden.In areas with a high degree of industrial agglomeration,local governments can appropriately increase the tax burden without causing the consequences of capital loss.The heterogeneity test by region shows that the impact of industrial agglomeration on the tax burden level of each region has regional differences.Overall,the empirical results in the eastern and central regions are consistent with the empirical results of the national sample,both in terms of coefficient sign and significance level,while the western region shows unclear results.The heterogeneity test of tax types shows that the impact of industrial agglomeration on the tax burden of each tax type is also different.Industrial agglomeration has a significant positive impact on the corporate income tax and personal income tax burden,while the impact on value added tax and business tax has not been significantly concluded.Finally,based on the summary of the results of the empirical test,this paper puts forward relevant policy recommendations,mainly to deepen the tax-sharing reform,rationally divide the tax rights,and make the local government have certain tax legislative power to make it more Autonomy;improve the level of industrial agglomeration,make full use of the external effects of industrial agglomeration,to attract more capital and factor inflows;change the economic development mode that only pursues economic growth,and reform the performance appraisal mechanism of officials to a certain extent,no longer GDP is the most important assessment indicator,but it is to build a diversified comprehensive assessment system;Optimize the government transfer payment system,consider both industrial agglomeration and regional coordinated development,and seek re-balancing in agglomeration.