An Study Of China’s Regional Revenue Growth And Economic Growth

This paper firstly defines some related concepts, including tax, economic growth and region, and briefly introduces some theories, including economic growth theory, tax effect theory, macro tax burden theory, tax elasticity theory and balanced budget fiscal theory.Secondly, after summarizing tax system and policy shift of China, we analyze and compare the tax growth and economic growth of eastern, central and western economic regions.Thirdly, on the basis of comparative analysis on the three economic regions, we utilize 1995-2009 provincial panel data to study Chinese regional tax growth and economic growth with dynamic panel data analysis method. The main contents include four aspects:first, the empirical analysis of the relationship between total revenue tax and GDP; Second, the empirical analysis of the relationship between tax revenue increment and GDP increment; Third, the empirical analysis of the relationship between macro tax burden and GDP growth; Fourth, based on the perspective of tax revenue elasticity, explore the relationship between tax revenue and economic growth.The empirical results are as follows:Firstly, as to the total amount analysis, since 1995, the total tax revenue of the eastern, central and western regions is significantly affected by GDP, and the effect on central region is larger than on east and west. This shows that economic growth is still a major factor of the rapid growth of tax revenue, this also completely accords with the objective laws of economy determine tax.Secondly, as to the incremental amount analysis, the tax revenue increment of the eastern, central and western regions is significantly affected by GDP increment, and the effect on the Middle of China, and the West of China and municipalities are larger than on east. This shows that economic growth is only one of the factors which boost the rapid growth of tax revenue in eastern region. There are still other factors which play important roles, moreover, the comprehensive influence factors is higher.Thirdly, as to the macro tax burden analysis, the low macro tax burden level of three economic regions has become an indisputable fact. There are weak positive correlation between macro tax burden and GDP growth, and the sequence is central region, eastern region and western region according to the correlation strength. This shows that we could boost the local economy’s rapid growth through effectively adjusting the macro tax burden, especially in the central region. However, the determination coefficients are generally small, i.e., a chunk of other factors account for GDP growth.Fourthly, as to the tax elasticity analysis, from 1995-2009, except it appeared transient fluctuation in 1998-2001, the tax elasticity of three economic regions is steady in other time. And tax elasticity grows with the economy synchronously, but slightly faster than economic growth. Especially in 2009, tax elasticity in central and western regions suddenly walks high, while in eastern region are more stable.Finally, we put forward some suggestions from the perspective of the preferential tax policy, deepening tax system reform, efficiency of tax collection and management, the structure of government investment and industrial structure.