The Impact Of Local Financial Pressure On Economic Welfare Performance Under The Background Of Tax Reform

In the new era,it is one of the important responsibilities of local governments at all levels to promote high-quality economic development and provide high-quality and efficient public services to meet the needs of residents in their jurisdiction for a better life,that is,to provide high-quality residents’ welfare.The key to realize the synchronous and high-quality growth of economy and residents’ welfare is to improve the performance of economic welfare,that is,the efficiency of residents’ welfare output brought by each unit of economic input.Since the tax sharing reform in 1994,the authority of local fiscal revenue has been transferred to the central government,while the authority of fiscal expenditure has been transferred to the local government.At the same time,the local government has more and more autonomy in local economic development,public goods supply and environmental protection,which has a more and more significant impact on regional economic welfare performance.A large number of documents show that local financial pressure is likely to promote local economic growth,but many documents show that local financial pressure will also lead to local Behavior Alienation,increase the degree of environmental pollution in the region or reduce the supply of local public services,so as to damage the welfare of local residents,that is,it will have an adverse impact on the performance of economic welfare.So what is the relationship between the increase of local financial pressure and economic welfare performance?The financial pressure of local governments usually refers to the pressure caused by the lack of financial revenue for local governments to meet the needs of financial expenditure.This paper uses the super SBM model to measure the economic welfare performance.On the basis of measuring the financial pressure and economic welfare performance of 283 cities in China from 2006 to 2017,it constructs a two-way fixed effect model to empirically analyze the impact of local financial pressure on local economic welfare performance.The results show that the local fiscal pressure has a nonlinear effect on the economic welfare performance,that is,the inverted "U" curve relationship.When the financial pressure borne by local governments exceeds a certain limit,the financial pressure will not be conducive to the improvement of economic welfare performance.By changing dependent variables and independent variables,this paper tests the robustness of the empirical results of the benchmark model and analyzes the regional heterogeneity.Then,through the analysis of the impact mechanism,this paper reveals the behavior tendency of the local government,and comes to the conclusion that the local government will adjust the fiscal expenditure structure and even relax the local environmental regulation after weighing the needs of power and expenditure responsibility,so as to cause some damage to the local ecological environment.At the same time,in the face of financial pressure that is difficult to alleviate,people’s livelihood financial expenditure will inevitably be affected,so as to reduce the quality of public service supply.This will affect the undesired output environmental pollution level and the expected output welfare level of economic welfare performance,and then affect the overall economic welfare performance of the region.On the other hand,local financial pressure also plays a certain role in promoting local economic growth,which is conducive to the improvement of economic welfare performance,and the improvement of value-added tax income is a manifestation.Therefore,we should reasonably allocate the administrative and financial power between the central and provincial governments and local governments,control the financial pressure of local governments within an appropriate range,strive to improve the efficiency of people’s livelihood expenditure,improve the implementation of the transfer payment system,and correspondingly improve the efficiency of environmental regulations and optimize the tax structure.Efforts should be made to achieve the simultaneous improvement of economic growth and residents’ livelihood welfare,and strive to achieve the relative balance of regional economic welfare performance.