Local Tax Revenue And Economic Growth

As an important influential element and the major result of the economic growth, the increase of the tax revenue has been the focus of the public concern., among which the interrelationship between the increase of the tax revenue and the economic growth has been one of the problems discussed in the theoretical cycle. As to China's reality, the rapid growth of the tax revenue since the taxation reform in 1994 has provided an important financial gurantee for the economic construction and the social development. However, currently there still exist some divergence misunderstanding and confusion in theory, concept and practice about the relationship between the increase of the tax revenue and the economic growth. Therefore, it is necessary to analysis the the various elements about the increase of the tax revenue and the economic growth and explore the regulation about them according to the principle of the relationship between the economic growth and the the increase of the tax revenue. It has not only theoretical but vital realistic implications for ensuring the sustained reasonable and stable growth of the increase of the tax revenue.Under the following theoretical and practical background, the leaders of the finance and taxxation and concerned governmental sectors has focused on the relationship between the economic growth and the increase of the tax revenue and carried out a lot of empirical study. However, most of the study chose the Chinese or certain type of economies as samples of their study and few did empirical analyses specializing in one province. Thus, concerned empirical analyses are very few. With an aim to enrich the experience and proof in this aspect, this paper attempts to make some efforts on it utilizes relevant Shandong data and do some empirical study on the relationship between the local economic growth and the tax revenue.This paper utilizes the sample data of Shangdong and Weifang provinces as well as their subordinate local cities and carries out some statistic and econometric tests for relationship between the local tax revenue and the economic growth. Our conclusion indicates that the local tax revenue and its growth rate has a positive correlation with GDP and its growth rate respectively. This demonstrates that, from a perspective of local economy, the economic growth will increase the tax revenue of the government which is consistent with the classic theoretical analysis. Therefore, making reasonable tax policies and strengthing the effect of its implementation are important guarantee for promoting the favourable interaction between the tax revenue and the economic growth.