A Study On Tax Competition Among Regional Governments Of China

Firstly, the paper analyzes the connotation, theoretical basis, classification and effect of inter-governmental tax competition, and then studies the tax competition gambling between two governments through a model. The conclusion is that attending tax competition is a balanced strategy of each government, but the rules of gambling must be strictly limited. Otherwise, the inter-governmental tax competition will cause the governments to fall into "the plight of prisoners".Afterwards, the paper studies the causes and classification of tax competition among regional governments in our country. The inter-governmental tax competition existing in our country can be classified into tax competition within system and tax competition beyond system. The later one is the main performance of tax competition among regional governments in our country, the reason of which lies in the imperfection of tax-splitting system, the limit of essential factor flow, and the unscientific appraisal and promotion system etc.Using the method of quantitative analysis combined with qualitative analysis, the paper studies the impact of tax competition on micro-tax burden of enterprises and macro-tax burden of region, capital flow, and economic growth. The conclusion is that inter-governmental tax competition among regional governments in our country lowers the effective tax rate of enterprise, and causes different taxation strategy towards essential factor of different economic type.Inter-governmental tax competition also balances the macro-tax burden of regions, which is mainly a result of tax competition beyond system. With the balance of tax preferential policies and the development of tax competition beyond system, the proportion of capital that central-west area occupies begins to ascend, but there is still a big gap between east and central-west area. According to the level of economic development and the basic situation of tax competition of different regions, using the method of cluster analysis, the paper classifies all the 31 provinces into four groups, through the analysis towards four representative provinces, the paper discovers that the contribution of tax competition to economy growth of the four regions is different, and the method of tax competition of the four areas is also different.In order to prevent inter-governmental tax competition from becoming a harmful one, the paper puts forward suggestions on how to standardize the inter-governmental tax competition among regional governments in our country. To realize the prosperous development of inter-governmental tax competition among regional governments in our country, the viewpoint of the paper is to build an open,fair,just frame and system by deepening the reforming of tax-splitting system, perfecting the transformation system, building a system of coordination of tax distribution and strengthening legal system's construction.