An Empirical Study On The Sustainable Effects Of Local Finance Based On Tax Cut Policies

The 13 th Five-Year Plan proposes "perfect fiscal sustainable development mechanisms." As an important part of fiscal revenue,taxation is a key element in maintaining local fiscal self-sufficiency.Recently taxation policies have focused on stimulating economic development as a tool of government macro-control,ignoring the basic function of raising fiscal revenue,and fiscal revenue and expenditure have shown imbalances.So,what is the impact mechanism of tax reduction policy on fiscal sustainability,and how to balance the relationship between macro-control and maintaining fiscal sustainability through the implementation of tax reduction policy,it is necessary to discuss.Previous scholars' research has focused on the debt and the relative relationship between fiscal revenue and expenditure.This article focuses on the relationship between taxation and fiscal sustainability.This article believes that this issue should be analyzed from three perspectives.The first is that the basic function of tax policy is the collection of taxes,of which the tax revenue of VAT and corporate income tax accounts for a large proportion,and the policy changes are also the most frequent.The second is that only by improving the self-sufficiency of local finances can we fundamentally solve the problem of unsustainable local finances.The third is that tax reduction policies indirectly affect local fiscal sustainability by affecting local tax revenue.The impact mechanism of taxation on local tax revenue is mainly concentrated in three aspects: income effect means the reduction of tax revenue brought by tax reduction policies;incentive effect means tax reduction policies promote economic development by affecting social consumption and investment,increasing fiscal revenue;agglomeration effect means tax reduction policies for high-tech enterprises promotes the formation of industrial clusters,then it forms new economic growth points and cultivates new tax sources,finally increases tax revenue,which is the innovation of this article.This article have three parts.Firstly,the taxation theories such as Keynesian,Supply School provide theoretical basis for the writing of this article.Based on the tax policies,this paper specifically analyzes the fiscal sustainable effects in different time periods,founding that tax policies have limitations on fiscal sustainability.Secondly,constructing three PVAR models,this paper examines the impact of changes in total tax burden,value added tax burden,and corporate income tax burden on fiscal sustainability,drawing conclusions: The income effects,incentive effects,and agglomeration effects of corporate income tax are significant;the income and incentive effects of value-added tax are significant,and the agglomeration effects are not significant;income effects and incentive in economic effects of total tax burden is significant.Consumption of economic effects and incentive effects has no significant impact on fiscal sustainability.Finally,in order to maintain local fiscal sustainability,this article proposes that we need to find economic growth points from three aspects: increasing the rigidity and resilience of tax policies,matching monetary policy,maintaining a reasonable tax burden and increasing the targeted of corporate income tax to carry out the next step of tax policies reform.