Tax Targets Lead To Tax Growth

Taxation is one of the most important tools for regulating economic performance.Over the past few years,many papers have focused on the theme of "high tax growth" or "tax revenue exceeding GDP growth" from multiple perspectives,but little attention has been paid to "tax targets",the key role of tax targets has not been fully explored.In fact,for a long time,China has developed a special growth mechanism-the "planned tax revenue growth mechanism".In order to achieve the set tax revenue targets,local governments often launch relevant plans to achieve the expected tax revenue growth.This paper examines the leading role of tax targets on tax revenue growth from both theoretical and empirical perspectives,and verifies the importance of tax target setting.At the theoretical level,based on a review of the existing literature,the analysis is carried out at two levels,namely strengthening tax collection and developing high-tax industries,to explore the influence mechanism of tax targets on tax growth,and heterogeneity analysis is carried out based on the level of regional development and tax task completion to propose corresponding hypotheses.At the empirical level,this paper uses macro panel data at the prefecture city level and provincial level from 2009-2018 to conduct a benchmark regression analysis using a two-way fixed-effects model,and on this basis,multiple robustness tests,mechanism tests and heterogeneity analyses are completed respectively to make the research of this paper more reliable and richer.The main findings of this paper are as follows:(1)tax targets have a significant positive impact on tax growth;(2)tax targets promote tax growth from two paths:enhancing the intensity of tax collection and promoting the development of high-tax industries;(3)compared to the central and western regions,the incentive effect of tax targets on tax growth is stronger in the eastern region;(4)compared to the case of higher tax task completion,the incentive effect of tax targets on tax growth is stronger in the case of lower tax task completion.Based on theoretical and empirical studies,this paper puts forward the following policy recommendations:first,strengthen tax forecasting work and set tax targets reasonably;second,optimize the tax assessment system and adopt multiple evaluation indicators;third,promote tax collection and management in accordance with the law and compress the room for discretion;fourth,relieve the pressure on local finance and narrow the government’s fiscal gap;fifth,distinguish development differences between regions and improve the leadership of tax targets.