The Impact Of Local Government Tax Competition On Green Development In China

At the 20 th National Congress of the CPC,the President Xi proposed to promote green development and promote the harmonious coexistence of man and nature.Green development is an integral part of high-quality development and an important historical topic in China.The 1994 tax sharing reform gave local governments a certain degree of financial autonomy,and under the encouragement of political promotion,local governments engaged in a "competition for growth" tax competition behavior.Local governments may reduce the actual tax burden of taxpayers through tax incentives,tax refunds,and relaxation of tax efforts,competing to guide the flow of production factors such as capital to the local area,leading to the redistribution of resources and thus having a certain impact on green development.This article takes this as the background to study the impact of local government tax competition on green development in China from both theoretical and empirical perspectives.In terms of theory,this paper defines the concepts of local government tax competition and green development.Through theoretical analysis of the promotion championship theory,the environmental federalism theory,the regional competition theory,and the "pollution haven" hypothesis,it proposes that local government tax competition behavior has an impact on the green development of the region and its neighbors through the path mechanism of economic growth effect,environmental pollution effect,and innovation driven effect.In terms of empirical analysis,this article uses data from 30 provinces(autonomous regions,municipalities)in China from 2000 to 2020 to incorporate the green development indicators measured using the SBM model into the spatial model for empirical analysis.After conducting the Hausman test,LM test,and LR test,this article chooses to use the spatial Durbin model to examine the impact of local government tax competition on green development.To ensure the reliability of the empirical results,this paper conducts a robustness test by replacing the weight matrix and the core explanatory variables.Considering the significant differences between the eastern,central,and western regions of China,this article conducted a heterogeneity test.Research has found that,firstly,there is a significant spatial correlation and a trend of spatial agglomeration in China’s green development.Secondly,local government tax competition in China has a negative impact on green development.The intensity of local government tax competition in the region will weaken the green development of the region and have a negative impact on the green development of neighboring areas,with a negative spillover effect.From the overall effect,local government tax competition is not conducive to the improvement of green development.Thirdly,there are significant differences in the relationship between local government tax competition and green development in the eastern,central,and western regions of China.Tax competition in the eastern region has no significant impact on green development,while local government tax competition in the central and western regions has a significant negative impact on green development.This article based on theoretical analysis and empirical conclusions,and aims to standardize the use of tax incentives and tax refund policies;Improve the efficiency of tax collection and management;Propose policy recommendations for establishing a scientific performance evaluation system to constrain local government tax competition and promote China’s better path to green development.