Research On The Influence Of "Replacement Of Business Tax With Value-added Tax" On The Scale Of Local Government Implicit Debt

In recent years,implicit debt of local government has attracted the attention of the government and scholars.The Central Economic Work Conference made it clear that we should address the implicit debt risks of local governments in December 2020.Then in December 2021,the Central Economic Work Conference continued to stress the need to resolutely curb new local government implicit debt.At present,there are many studies on the contributing factors of the continuous expansion of implicit debt scale of local governments.Scholars mainly study from the aspects of fiscal pressure,development pressure,promotion of officials,urbanization and land financial revenue,etc.,but few studies on the impact of reform of "replacement the business tax with a value-added tax" on the scale of local government implicit debts.In the author’s opinion,under the background of rigid financial expenditure,"replacement of business tax with value-added tax" eliminates the collection of business tax and solves the problem of repeated taxation caused by business tax,which leads to a significant decrease in local financial revenue and a further increase in financial deficit.Will local governments close the financial deficit by expanding the scale of implicit debts?At the same time,"replacement of business tax with value-added tax" has promoted the development of the service industry.The development of the service industry has attracted a large amount of capital and labor into cities,and with the increasing urban population,local governments need to build more infrastructure.So how can local governments solve the capital needs for infrastructure investment?Based on the above questions,this paper conducts a study on the influence of"replacement of business tax to value-added tax" on the scale of local government implicit debt.Qualitative analysis and quantitative analysis are used in this paper to discuss the impacts of the "replacement of business tax with value-added tax" on the scale of local government implicit debt.This paper is mainly divided into five chapters:Chapter one contains the proposition of the question,main concept definition,the research ideas and methods as well as the innovation points and shortages.Chapter two is literature review.Collecting relevant literature at home and abroad,including the literature related to the reform purpose of "replacement of business tax with value-added tax" and its economic impact,as well as the literature related to the influencing factors of local government’s implicit debt scale.On this basis,this paper summarizes the relevant research on the influence of"replacement of business tax with value-added tax" on local government’s implicit debt scale,and summarizes and briefly evaluates the existing research.The third chapter is about the analysis of institutional background and typical facts.Firstly,this paper summarizes the reform process of "replacement of business tax with value-added tax",and analyzes the impact of the reform on local financial revenue and expenditure based on fiscal data.Then this paper measures and analyzes the change trend of local government’s implicit debt scale.The fourth chapter is an empirical study on the impact of the reform of "replacement of business tax with value-added tax" on the scale of local government implicit debts.This paper cuts out some prefecture-level cities with missing data.On this basis,This paper chooses the country’s 220 prefecture-level cities in 2009-2015 panel data.The interference of guo fa[2014]no.43 and new "budget law" policy on the empirical results is excluded by using the local government implicit debt ratio indicator and the local government implicit debt liability ratio indicator.Under this premise,this paper adopts the progressive DID method to empirically study the influence of "replacement of business tax with value-added tax" on the scale of local government implicit debt.At the same time,this paper conducts a heterogeneity analysis between the eastern regions and non-eastern regions.And the robust analysis of the empirical results is made by means of parallel trend hypothesis test and the replacement of explained variables.Finally,this paper selects the mediation effect model to test whether there is an intermediary conduction role of local financial deficit in the mechanism of the influence of"replacement of business tax with value-added tax" on the scale of local government implicit debt.The empirical results show that "replacement of business tax with value-added tax"increases the scale of implicit debt of local governments,and local financial deficit plays an intermediary transmission effect,specifically,"replacing business tax with value-added tax"has a positive transmission effect on the scale of implicit debt by increasing local financial deficit.The fifth chapter is the conclusion and policy suggestion.Based on the conclusion and the actual situation of our country,this paper gives some suggestions on deepening the reform of fiscal and taxation system and solving the implicit debt problem of local governments.The main innovations of this paper are as follows.Firstly,the data which used in this paper is from the city-investment bond database of Xu Junwei,etc.(2020).The database is defined with the new list of financing platform companies so the data is more reliable and the empirical results are more convincing.Secondly,this paper study the impact of the reform of"replacement of business tax to value-added tax" on the scale of implicit debt of local governments,which is helpful to broaden the research field of the reform of "replacement of business tax to value-added tax”.The shortcomings of this articles are as follows.Firstly,this article uses the interest-bearing debt of the financing platform company to represent the implicit debt,and certain deviation between the calculated interest-bearing debt balance and the real implicit debt scale may exist.Secondly,some cities are excluded from the empirical analysis due to serious lack of data,which may lead to a certain deviation between the empirical results and the actual results.