Research On The Taxation Incentive Effect Of Chinese Manufacturing Firms

The report of the 20 th Party Congress in 2022 pointed out that we should adhere to the theme of promoting high-quality development and accelerate the construction of a strong manufacturing country and a strong quality country.At present,after more than 40 years of reform and opening up,the scale of China’s manufacturing industry has leaped to the first place in the world and occupies an important position in the national economy.However,with the change of manufacturing scale,Chinese manufacturing industry has been playing the role of "world factory" and facing the predicament of "low-end lock".More importantly,the declining factor dividend and the impact of emerging economies have led to the gradual weakening of the comparative advantage of China’s manufacturing industry,and developed economies such as Europe and the United States have also led the manufacturing industry to "return",and the outbreak of the COVID-19 has accelerated this process.In this regard,as the world’s largest manufacturing economy,how to further promote the quality and efficiency of manufacturing enterprises and the high-quality development of manufacturing industry in the new development stage,especially in the transition period,has become a major theoretical and practical problem that needs to be solved.In the process of improving the quality and efficiency of manufacturing enterprises,finance,as the foundation and important pillar of national governance,undoubtedly plays an important role.In recent years,the tax incentive policy,mainly tax reduction,has become an important tool for the government to "stabilize growth,adjust structure and promote transformation".The policy of accelerated depreciation of fixed assets("accelerated depreciation")is one of the important elements for the manufacturing industry.At present,although a lot of literature has examined the effect of accelerated depreciation policy,but more in the "growth" level,there is little literature to study from the perspective of quality and efficiency,and the study of its impact on the investment efficiency,employment and export quality of manufacturing enterprises is more rare.More importantly,little is known about the effect of tax incentives on the quality and efficiency of the manufacturing sector.2023 government work report suggests that active fiscal policy should be strengthened and made more effective.In view of this,this paper tries to start from the perspective of manufacturing enterprises to improve quality and efficiency,analyze the evolution of accelerated depreciation policy and the development characteristics of manufacturing industry,and examine the incentive effect and inner mechanism of accelerated depreciation policy on the investment efficiency,employment and export product quality of manufacturing enterprises respectively according to the input-output analysis,so as to provide some insights for the comprehensive clarification of the tax incentive effect of manufacturing enterprises,play the important role of taxation in national governance,and then help the high-quality development of manufacturing industry.This paper first analyzes the facts characterizing the evolution of accelerated depreciation policy and manufacturing development in China.In terms of policy evolution,China’s accelerated depreciation policy can be divided into two stages:early exploration and rapid development.Compared with the early exploration period,the accelerated depreciation policy in the rapid development period has a wider scope of implementation,a variety of depreciation methods,and a broader policy impact.The actual tax benefits of accelerated depreciation policy may vary depending on the depreciation methods,but in general,it will increase the amount of depreciation credit for fixed assets in the early stage,thus alleviating the financing constraints of enterprises and improving their cash flow.When considering the time value of money,the accelerated depreciation policy effectively increases the present value of total corporate tax benefits,and the tax benefits are enormous.In terms of manufacturing development,using macro statistics on the manufacturing industry,this paper finds that China’s manufacturing industry growth is somewhat lacking in momentum and there is heterogeneity in internal development,which requires further quality and efficiency improvement.Specifically,although the scale of China’s manufacturing industry is increasing year by year,the economic creation capacity is decreasing,and the growth rate of fixed asset investment,employment,and export is obviously slowing down from various indicators.At the same time,the distribution pattern of China’s manufacturing industry,which is more in the east,second in the middle and less in the west and northeast,has not changed significantly,and the development gap between internal industries is also very obvious.From the perspective of tax burden,the overall tax burden of manufacturing industry is higher than the national macro tax burden,in which the proportion of income tax to manufacturing tax revenue and income tax burden have increased,and the proportion of direct taxes such as income tax is gradually increasing.Second,based on the panel data of manufacturing A-share listed enterprises from2010-2018,and on the basis of measuring the investment efficiency of manufacturing enterprises,this paper empirically examines the impact of accelerated depreciation policy on the investment efficiency of manufacturing enterprises.It is found that the accelerated depreciation policy reduces the investment efficiency of manufacturing enterprises,and this effect is mainly caused by the over-investment of over-invested manufacturing enterprises after the implementation of the policy,and has no significant effect on the investment efficiency of under-invested manufacturing enterprises.The negative effect of accelerated depreciation policy on the investment efficiency of manufacturing enterprises is more pronounced in state-owned enterprises,high capital-intensive enterprises,enterprises in textile and machinery industries,and mature enterprises,but the degree of market competition and the improvement of corporate governance can effectively suppress the negative effect of accelerated depreciation policy on the investment efficiency of manufacturing enterprises.The mechanism test finds that accelerated depreciation policy is an important reason for exacerbating the inefficient investment of overinvested manufacturing firms through the alleviation of financing constraints and the increase in investment brought by the improvement of external information environment.At the same time,accelerated depreciation policy has produced some economic consequences,mainly in the form of increased debt financing,increased maturity mismatch of investment and financing,and overcapacity.Third,this paper integrates the data of listed manufacturing enterprises and RESSET employee structure data from 2010-2018,and measures the level of human capital of manufacturing enterprises by using the method of vector clamping,and on this basis,the impact of accelerated depreciation policy on the job market is tested.The results show that the accelerated depreciation policy effectively increases the number of workers employed by manufacturing firms and raises the level of human capital structure of manufacturing firms,which helps achieve fuller and higher quality employment in the manufacturing industry,but does not significantly improve the average wage level of workers.The effect of accelerated depreciation policy on labor force employment in high capital-intensity manufacturing firms,large manufacturing firms,and manufacturing firms with less difficulty in labor force adjustment is more pronounced than in low capital-intensity firms,small and medium-sized firms,and firms with more difficulty in labor force adjustment.In terms of employment size,the accelerated depreciation policy has a "substitution effect" on overall labor force employment by increasing investment in fixed assets and R&D on the one hand,and an "output effect" on labor force employment by increasing output on the other hand,and the "output effect" is greater than the "substitution effect",which increases the number of employees in manufacturing enterprises.In terms of human capital structure,the increase in investment in fixed assets and R&D has substituted a large amount of low-end labor and also produced a "complementary effect" on a small amount of high-end labor,thus promoting the improvement of human capital structure of manufacturing enterprises.Fourth,we match the data of listed manufacturing enterprises and customs data from 2010 to 2015,measure the quality of export products,and examine the incentive effect of accelerated depreciation policy on upgrading the quality of manufacturing export products.The results of the study indicate that the acceleration policy policy contributes to the upgrading of manufacturing firms’ export product quality.This effect is more pronounced among high-productivity firms,large firms and manufacturing firms whose investments are dominated by investments in machinery and equipment.In terms of mechanism of action,increasing investment in machinery and equipment category and upgrading human capital structure are important reasons for accelerated depreciation policy to promote the upgrading of export product quality of manufacturing firms,while accelerated depreciation policy increases R&D investment of manufacturing firms,but within two years of the policy implementation,R&D investment has not yet been converted into innovation output,and the export product quality of firms has not been upgraded through innovation-driven effect for the time being.In addition,the improvement of export product quality brought by the accelerated depreciation policy increases the export sales revenue and export sales revenue growth rate of manufacturing enterprises,which helps improve the export performance of manufacturing enterprises.The policy insights of this paper are as follows: First,deepen and improve the policy of accelerated depreciation of fixed assets to help manufacturing enterprises improve quality and increase efficiency.Second,improve the investment environment of manufacturing industry,and actively form reasonable and effective enterprise investment.Third,broaden the financing channels of manufacturing industry and optimize the investment and financing allocation structure of enterprises.Fourth,focus on human capital,and promote fuller and higher quality employment in the manufacturing industry.Fifth,improve the policy of small and medium-sized enterprises,to achieve the coordinated development of manufacturing all-sized enterprises.Sixth,the overall use of "combined" taxation tools to promote the quality of manufacturing exports upgrade.