The Empirical Study On Incentive Effects Of Tax Decentralization In China

Taxing power is a public authority. As a tax management power, it is owned and performed by the state and is a concentrated expression of national sovereignty in the field of taxation. Taxing power is the union of the tax legislation, the tax enforcement,the tax jurisdiction, and the tax benefit belonging power.In the modern market economy and democratic political system, the tax decentralization has been an important problem of economics, political science, law and many other subjects. Since the tax reform in1994, the Chinese government has been searching for the method tax decentralization which is suitable for Chinese condition. Tax decentralization in China is different from Western tax decentralization. Tax decentralization in China is and two-end sword. On one hand, it made great improvement, increased the central macro-control capacity, stimulated the enthusiasm of local governments, promoted the sustained and rapid economic growth, On the other hand, the problems raised during the development of China, such as financial difficulties of local governments, the increasing tax competition between local governments, non-tax revenue accounting for a higher proportion of local fiscal revenue,land fiscal problems, etc, are closely related to the tax decentralization system.It is of great significance that scientifically evaluates the incentive effects of tax decentralization, analyze the tax decentralization issues and reveal its cause, explore the Chinese tax decentralization system path facing the new changes between Central and Local Tax Power distribution.Scientifically evaluating the incentive effects of tax decentralization system based on China’s national conditions.In this paper the main problems concerned is what impact the china’s tax decentralization institutional had on Chinese economy and Whether has further room for improvement. For most research on China’s tax decentralization are normative, this paper attempts to reveal the mechanism of the incentive effect of tax decentralization theoretically and evaluate the incentive effects of tax decentralization empirically using Chinese provincial data drawing on the latest achievements in the development of the theory of economics, management, politics, law, etc.The structure of this paper is organized as follows:Chapter1, introduction; Chapter2, Combine a theoretical basis of the economic effects of tax decentralization, to lay the foundation for later research; Chapter3, Empirically analyze the tax decentralization institutional change since the founding of New China,the main course of tax decentralization change is divided into three stages:from the founding of china to the reform and opening up is the first stage; from the reform and opening up to the tax-sharing system is the second stage; The third stage is after the tax-sharing. We empirically analyze the relationship between tax decentralization and economic growth in chapter4by establishing the panel data econometric model using the data of30provinces in China in1999-2008.We empirically analyze of the relationship between tax decentralization and regional tax competition using available research results for reference, establishing the econometric model using the panel data of30provinces in China in chapter5. We separated the efficiency index of tax administration and analyze the effect of tax decentralization on the efficiency index of tax administration in chapter6. Suggestions and prospects for the conclusion of the paper are in chapter7.The basic conclusion of this study is:(1) under the Chinese-style fiscal decentralization, both from the country and from the sub-regional aspect, taxes decentralization has a negative effect on economic growth. The reason is that unreasonable tax decentralization institutional arrangements offset the incentive effects of decentralization brought.(2) Either per capita or total description of tax decentralization has a negative effect on tax competition between regions. The main reason is that the Chinese tax decentralization is different from the west; there is not full sense of the tax decentralization in China.(3)The expansion of taxing power is not beneficial to the improvement of the efficiency of tax administration. After China’s tax sharing reform, the existing tax system was divided into two major departments of the National and Local. Unclear functions of the tax authorities, overlapping institutions, staff redundant, are not conducive to the improvement of the efficiency of tax administration. The local government did not form an effective efficiency constraint. Conversely, local government presumed the improvement of revenues, relying on the expansion of the sector, and the increase of the number. To some extent, the tax sharing reform caused the unnecessary tax competition by the central government and local governments, which led to efficiency losses and suppressed the improvement of the efficiency of tax administration a certain degree.