The Study Of Horizontal Tax Competition Between Local Government From The Perspective Of Public Choice

Fiscal and taxation management is one of the core contents of government administration,which directly affects the governance capability of local governments,and thus affects local economic and social development.The Horizontal Tax Competition between local governments directly affects the local government’s fiscal and taxation management,and directly affects the development and public welfare.Therefore,it is of great significance to study the problem of Horizontal Tax Competition among local governments,and to improve the management level of local governments and promote local economic and social development.This article sets some certain limitations on the research topics:perspective of public choice theory,local government-taking Nanjing as an example,and Horizontal Tax Competition.Which is different from the concept of vertical tax competition,Horizontal Tax Competition refers to a series of in-system or out-of-system tax competitions conducted by neighboring or similar local governments in order to compete for tax resources.Based on the political and economic reality of China,under the framework of China’s tax-sharing system,the use of public choice theory to analyze Horizontal Tax Competition among local governments is an important theoretical framework for this paper.Among them,the public choice theory used in this paper is to analyze the reasons for the deep level of Horizontal Tax Competition of local governments and draw conclusions from the perspective of individualism by using local government and local government officials as economic people,which is different from the traditional theories.In addition to the traditional literature methods and data methods,the research methods used in this paper also include interview methods.A large number of cases and data have been used to support this point of view,making the discussion more vivid and appropriate.This paper takes Nanjing as an example,starting from the perspective of public choice theory,to study the problem of Horizontal Tax Competition among local governments from the aspects of phenomenon,influence and reason.It has been found that Horizontal Tax Competition exists among local governments.The main players in competition are district governments and their subordinate townships and sub-district institutions,while rural and urban communities have extremely limited participation;the object of competition is free-flowing companies and their taxes,but local governments have different degrees of favor for different types of industries,the size of enterprises,and types of taxes.They are mainly based on local government’s considerations of input-output ratio and opportunity cost;the forms of competition are mainly out-of-system competition and are mainly divided into The three categories:tax return agreements,competing for the tax resources and promotion of services for companies.The positive impact brought by Horizontal Tax Competition is limited to the region,including expansion of local government financial resources,reduction of companies tax burden,and improvement of government service awareness and ability;and it is more negative to macroeconomic and social development.It is manifested in seven aspects:eroding the overall tax base,weakening taxation and controlling economic functions,undermining the market’s fair competition environment,excessively intervening in microeconomic operations,wasting government administrative resources,ignoring economic reform and development,and fostering rent-seeking corruption.The reasons for the Horizontal Tax Competition can be divided into external factors and internal factors.Externally,the free-flowing enterprises created by the market economy become competitive objects and the tax-sharing system reform created the competitive environment.The internal cause is the result of the analysis using public choice theory.The government,as a rational person,has the power to increase fiscal revenue and the pressure of financial expenditures.On the other hand,policy makers in local governments have incentives to meet assessments and improve their political performance to pave the way for political promotion.The executors of the policy have to meet the assessment to obtain performance bonus income.Therefore,if we want to improve the relationship between Horizontal Tax Competition among local governments,and better serve economic and social development,we must first realize that due to the existence of the role of economic people in local governments and officials,and the predicament of local governments,It is very difficult to eliminate or completely improve Horizontal Tax Competition in a short period of time.From the fact that the country,provinces,and cities haven’t achieved practical results in recent years,this viewpoint has also been verified.Second,the strategy of restricting companies,through strict tax legislation enforcement,upgrading the financial and industrial taxation department’s information management level,so that tax competition is no longer a gap;Third,the strategy of restricting competition,including the adoption of legislation to clean up and regulate tax preferences,enhance the marketization of state-owned assets Management level,ensuring independent administration of taxation departments,and reducing government’s intervention in microeconomics;Fourth,the strategy of restricting local governments,mainly from the perspective of public choice,include improving the government’s financial allocation mechanism,optimizing the promotion and assessment mechanism for officials and strictly regulating financial expenditures.The innovation of this article lies in applying the methodology of public choice theory,and combining with a large number of real documents an interviews,which can describe the real status of Horizontal Tax Competition among local governments and analyze the root causes in-depth.As a result,this article have enough basis to put forward countermeasures for problems.The Shortcoming of this article is that the research range is not wide.At the same time,due to privacy promise,this article involves the names of places and people,which brings some influence to the convincing of this article.