A Study On The Impact Of Local Government Tax Competition On The Rationalization And Upgrading Of Industrial Structure

Since the tax-sharing system reform in 1994,China has clarified the financial relationship between the central and local governments,and given local governments certain financial autonomy.The local government’s financial power has increased,but the administrative power has actually weakened to a certain extent.Coupled with the GDP as the main assessment indicators of the promotion mechanism for the local government has an unprecedented pressure.How to attract more resources to develop the local economy has become the most concerned issue of the local government.And in this process,each place gradually projects the vision to the neighboring province or the region,starts to use the financial subsidy and the tax preferential treatment and so on way,attracts other region’s economic resources to flow into this region.In theory,such tax competition can promote the flow of economic factors within a reasonable range and promote the local economy and industry,but too high level of tax competition will be counterproductive.So whether our local government can use tax competition means to bring economic benefits and industrial development to the local economy?Therefore,this paper selects the provincial data to establish panel data analysis,trying to analyze the impact of local government tax competition on the local industrial structure.Through the comprehensive theoretical analysis and empirical analysis of two aspects to elaborate.At the theoretical level,this paper analyzes the general situation of tax competition in various countries,the causes and forms of tax competition as well as the mechanism and path of industrial structure.On the positive side,a data panel regression model was established from the national perspective to analyze the impact of tax competition on the upgrading and rationalization of industrial structure,this paper analyzes the differences of the influence of tax competition on the industrial structure of each economic region in China.The first part of the article is an introduction,which elaborates the research background and significance of the influence of tax competition on industrial structure,and extracts the related literature viewpoints of tax competition and industrial structure research,the second part is the related theoretical analysis,briefly describes the mechanism of tax competition affecting the industrial structure;The third part discusses the current situation of tax competition and industrial development of local governments in China,and the fourth part sets up panel data model from the national perspective and four economic regions,this paper analyzes the data of 30 local governments in China from 2010 to 2019,and proves the existence of local government tax competition and the difference of its influence on different regions.The fifth part,based on the results of the empirical analysis in the previous chapter,puts forward some policy suggestions to use tax competition reasonably and speed up the development of industry.