The Impact Of Tax Reduction And Tax Administration On The Tax Burden Of Chinese Enterprises

With the further reform in China,the tax and fee reduction policy has also become an important measure to deepen the reform of fiscal and tax system in China.From a theoretical perspective,tax and fee reduction is not only a counter cyclical regulation measure of macroeconomic regulation,but also a cross cyclical and long-term arrangement to stimulate market vitality and entrepreneurs’ innovation and entrepreneurship.It can help enterprises directly reduce the tax burden,reduce their production and operation costs,promote enterprises to pack light and enhance their development potential.And enterprises’ growth will contribute to national economy’s expand.However,some studies reflect that the enterprises’ tax burden has not been reduced accordingly with the introduction of the policy of tax and fee reduction,or the range of tax burden reduction is not as expected,forming the dilemma of "tax reduction is difficult to reduce the burden as expected".Under the current downward pressure on China’s economy and the urgent need to cultivate market players and reduce the burden on enterprises,explore the causes of the dilemma of "it is difficult to reduce taxes and burdens as expected" and put forward corresponding countermeasures is highly necessary.And it is very important to further implement greater tax and fees cut,consolidate the foundation,stabilize expectations and benefit the long-term,and make China’s economy stable and far-reaching.This paper focuses on the reasons why the tax and fee reduction policy didn’t reach it’s goal as expected.It mainly considers the factors of tax administration,integrates this factor into the impact of tax and fee reduction on enterprises’ tax burden,clarifies the logical relationship between the tax and fee reduction policy,tax administration and enterprises’ real tax burden,and hold the point that the tax and fee reduction policy will directly reduce the tax burden of enterprises on the one hand,but the policy will also change local governments’ conducts on the other hand.That is to say,under the policy of large-scale tax and fee reduction,local governments will ensure fiscal and tax revenue by strengthening tax administration under fiscal expenditure pressure,and strengthening tax administration will increase enterprises’ tax burden,which means tax and fee reduction policy effect will be weaken.This is the reason why “it is difficult to reduce taxes and burdens as expected”,and this is the logic of this paper.Firstly,this paper constructs a mathematical model and deduces around the goal of enterprise profit maximization to verify whether the logic mentioned above is tenable,and prove that tax and fee reduction policy did really reduce enterprises’ tax burden,and tax administration exactly strengthen enterprises’ tax burden.And then,based on the data of Listed Companies in guotai’an database from 2008 to 2016,the empirical research is carried out.Specifically,this paper take the implementation of the "replacing business tax with value-added tax" in China as the proxy variable of the tax and fee reduction policy.And the proxy variable of local government tax administration is estimated by using the methods of Lotz and Morss.Through empirical design,this paper estimates the direct tax reduction effect of the tax reduction and fee reduction policy represented by "replacing business tax with value-added tax" on enterprises and the indirect tax increase effect formed by the factor of tax administration,and then discusses the causes of the dilemma of "it is difficult to reduce taxes and reduce burdens" from the perspective of tax administration,and puts forward feasible policy suggestions.Finally,the study found that the tax and fee reduction policy did significantly reduce enterprises’ tax burden,but local governments will strengthen its tax administration after the enforce of the tax and fee reduction policy,which weakened the tax reduction effect of the tax and fee reduction policy and formed a masking effect,and the effect reached 46.15%.That is to say,the effect of tax and fee reduction policy had been weakened about 46.15% by the strength of tax administration.When analyzing the heterogeneity by region,this paper also found that the tax and fee reduction policy had the strongest tax reduction effect on enterprises in the eastern region of China,and the masking effect of tax administration was the weakest,only 4.8%;There is also a tax reduction effect on two regions of China,which is central and northeast,but due to the strong masking effect of tax administration in these two regions,reaching 46% and 24% respectively,the tax reduction effect of tax and fee reduction policy has been greatly weakened;In the western region,policy has significantly increased enterprises’ tax burden.And the tax administration is no longer a cover up effect,but a 35.3% intermediary effect.And through the robustness test,it is found that “the replacement of business tax with value-added tax” in the service industry also reduces the tax burden of other industries.According to the research conclusions,policy suggestions should follow the inclusive tax reduction idea of "wide tax base,low tax rate and strict tax administration".On the one hand,we should further implement the tax and fee reduction policy,reduce the tax rate,promote the implementation of the tax and fee reduction policy,enhance the sense of gain of enterprises and effectively cut enterprises’ tax burden.And we should strengthen tax administration and open up space for reducing enterprise tax rate on the other hand;At the same time,we should speed up the construction of a modern fiscal and taxation system and reasonably divide the expenditure responsibilities between central and local government,increase the proportion of central government expenditure when tax reduction and fee reduction policy introduced;And improve the local tax system and ensure the source of local government revenue;The most fundamental thing is to change the functions of local governments,build a service-oriented government,reduce the financial expenditure pressure of local governments on economic growth,and create space for further tax and fee reduction.