The Effect Of Income Tax Incentives On Total Factor Productivity Of Manufacturing Enterprises

The high-quality development of China’s economy is inseparable from the improvement of total factor productivity,and the comprehensive enhancement of total factor productivity is the key point for China to realize the transformation of its economic system.The creativity of micro subjects is related to the development of the whole country,and also drives the stable growth of macro economy.As the pillar of the country,the efficient development of manufacturing industry is an important source of China’s economic growth and an intuitive reflection of the country’s productivity level,so this thesis has the value of selecting listed manufacturing companies as the research object.In order to help the development of enterprises,the government has made active efforts and has now introduced a series of tax incentives.According to the State Administration of Taxation,as of May 16,2022,combined tax support policies have reduced tax burden and increased cash flow of more than 1.6 trillion yuan for enterprises,greatly boosting the confidence of market players.So can the implementation of income tax incentives be truly effective in improving the total factor productivity of enterprises? This is a question worth exploring.Based on this,this thesis uses literature analysis and empirical research to explore how income tax incentives work on total factor productivity of manufacturing firms and whether there are significant differences in the effects across manufacturing firms,and to analyze the moderating role played by the business environment in this process.Firstly,by reading the literature,this thesis summarizes the existing research results,sorts out the relationship between income tax incentives and enterprise total factor productivity,reviews the literature,and puts forward the research direction of this thesis.Then theoretical research is conducted to define the important concepts of this thesis and put forward the theoretical basis.It is found that income tax preferential policies can play a role in correcting externalities,transmitting positive signals and alleviating financing constraints.It is concluded that the main way that income tax preferential policies affect the total factor productivity of enterprises is technological progress and efficiency improvement.Secondly,this thesis conducts a status quo analysis,briefly compares the income tax preferential policies related to manufacturing enterprises,finds their current problems,and also analyzes the overall trend and heterogeneous trend of total factor productivity of manufacturing enterprises.Thirdly,from the empirical aspect,this thesis takes A-share listed manufacturing enterprises from 2008 to 2020 as the research sample,adopts the fixed effect model,and fixes individual and time to verify the incentive effect of income tax incentives on the total factor productivity of manufacturing enterprises.The study concludes that:(1)Income tax incentives can significantly increase the total factor productivity of manufacturing firms;(2)Differences in the characteristics and geographical location of manufacturing enterprises will have different effects on the relationship between income tax incentives and total factor productivity of enterprises,and the incentive effect is more significant for non-state-owned enterprises,enterprises with strong financing constraints,technology-intensive and capital-intensive enterprises,and enterprises in eastern and central China;(3)Income tax incentives can stimulate enterprises to increase innovation investment,including R&D capital investment and R&D personnel investment,and thus improve the total factor productivity of manufacturing enterprises;(4)Business environment plays a positive moderating role in the path of income tax incentives to stimulate total factor productivity of manufacturing enterprises,and the better the business environment of the region where enterprises are located,the stronger the incentive effect of income tax incentives.Finally,based on the analysis of the research findings,the thesis proposes corresponding policy recommendations: First,improve the tax incentive system,reduce the tax burden of enterprises;Second,implement differential tax policy to promote the coordinated development of enterprises;Third,continue to improve the business environment and play the role of the market;Fourthly,Improve the tax collection and administration system to ensure the effective implementation of policies.This thesis is of great significance to understand the internal relationship between tax incentive policies and enterprise total factor productivity,and can provide reference for China to further improve tax incentive policies,give full play to the role of government in regulating the economy,comprehensively deepen the supply-side structural reform,and improve the core competitiveness of manufacturing industry.