Strategy Selection Of Industrial Transformation And Upgrading Of The Tax Reform Policy

Because of inefficiency utilizing resources and the strong dependence on labor and natural resources, traditional industry is easy to cause serious pollution to the environment and ecological destruction, therefore, China will focus on promoting the transformation and upgrading of traditional industries, and accelerate the development of high-tech industries in the"12th Five-Year Plan" period. Since the start of the global financial crisis in2008, with the characteristics of manufacturing-led economy and reling heavily on the import of the European and American countries, China’s coastal regional economic has been hit hard. The risk resistance capacity of basic industry is weak, while the development of the tertiary industry is insufficient. The development degree and the technological level of the pillar industry is low, while the development of high-tech is still lagging behind. The enterprise innovation ability is not strong, and the enterprise lack core competitiveness, consequently, production capacity surplus and shortage situation become more and more serious.Industry transformation and upgrading not only enhances regional competitiveness, but also promotes the sustained, swift and sound development of regional economy in the late industrialization. Using the method of nonparametric variable elimination and variable selection(Qi Li,2007), this paper identifies economic variables relating with the tax revenue, and then recognizes the parametric variables which have a linear relationship with the tax revenue, and the nonparametric variables which have a nonlinear relation with the tax revenue. In the method of variable elimination and variable selection above, not fully using the method of nonparametric variable elimination and variable selection(Qi Li,2007), but combining the error value of the non-parametric regression estimation model, the paper considers both the method of non-parametric variable elimination and variable selection and the model errors, and ultimately eliminates irrelevant variables of the model of the paper, and obtains the linear variables and nonlinear variables in the semi-parametric model.Based on identifying the parametric variables and nonparametric variables of the model above, combining the tax reform policy, the paper establishes a non-parametric path identification method to explore the path selection of regional industrial transformation and upgrading. As an application, using Hangzhou Taxation Bureau data from2007to2010, with an assumption of keeping the total tax revenue unabated, the method is illustrated. The first step is to give the possible effects of the tax reform policy. The study finds that:"Business Tax Replaced with VAT" will reduce business taxes, while increasing business income taxes. The second step is to propose policy design of the tax reform:In the jurisdiction of each tax bureau, if use the reducing or increasing revenues of tax as the input of regional industrial transformation and upgrading, it can increase the tax revenue. From the perspective of increasing the tax revenue, it can be given the path selection of the various regional upgrading:investing in fixed assets, R&D, or going into the industrial transfer instead of investing. The third step is to analyze allocation effects and scale effects of policy design.The above method can accurately determine the strategic selection of the transformation and upgrading of enterprises, which causes a supervisory problem. The capital invest ment of the transformation and upgrading of enterprises comes from the enterprise tax revenue, therefore, we must ensure that enterprises can not realize tax evasion. If the tax evasion of the enterprises is severely serious, resulting in a large number of loss of the original capital investment of the transformation and upgrading, the inputs of the transformation and upgrading can not be guaranteed, which leads to the consequence that it is impossible to achieve the transformation and upgrading of regional industry. Therefore, using the monthly data of two years of47companies, the paper also composes the time-varying parametric model, makes a simulation analysis on the tax evasion behavior of enterprises. The idea and the results of simulation analysis, can provide certain theoretical guidance suggestions for government regulating the tax evasion behavior of enterprises.