The Incentive Effect Of Government Subsidies And Tax Incentives

Government subsidies and tax incentives,as two important policy instruments for the government to regulate the market,are designed to promote the development of specific industries or enterprises.Some scholars believe that government subsidies and tax incentives do have a positive incentive effect and can achieve a good policy effect,while some scholars hold the opposite view,believing that these two tools are likely to have a negative effect.Most of the previous literature on the incentive effects of government subsidies and tax incentives has chosen the whole industry as the object of study,with few studies refining them to different industries.Due to the heterogeneity of different industries,this paper refines the research object to the software and information technology service industry,using a sample of listed companies in this industry to study the policy effects of government subsidies and tax incentives based on the perspective of enterprise growth.This paper combines the existing literature and develops the subsequent research based on the theories related to this paper.This paper selects listed software and information technology service industry enterprises in Shanghai and Shenzhen A-shares from 2015-2021 as the research sample.Firstly,we refer to some scholars’ articles to collect 11 conventional indicators and 2 industry-specific indicators,and use factor analysis to comprehensively measure the growth of the sample enterprises,and secondly,we refer to other scholars’ indicators to measure the intensity of government subsidies and tax incentives,and construct a regression model for Empirical test.The empirical results show that government subsidies are positive but insignificant for the growth of software and IT service industry enterprises,which means that the stronger the government subsidies are,the more likely they are to be beneficial to the growth of enterprises;tax incentives are positive and significant for the growth of enterprises in this industry,which means that the stronger the tax incentives are,the more likely they are to promote the growth of enterprises in this industry.The regression results by region and by nature of enterprise found that the positive incentive effect of tax incentives on the growth of enterprises in the eastern region and non-state enterprises was more significant.Based on the empirical results of this paper,the following policy recommendations are put forward: government subsidy policies should comprehensively examine the subsidy targets,subsidize by links,innovate the form of subsidy and set up incentive mechanisms;tax preference policies should improve the formulation of policies,strictly investigate the phenomenon of illegal tax refunds,implement differentiated policies by regions and formulate reasonable supervision and feedback communication mechanisms.This paper provides empirical evidence and a theoretical basis for the operation mechanism of both government subsidies and tax incentives in software and information technology service industry enterprises,and has certain implications for the future growth of enterprises in this industry.