Research On The Impact Of "Replacing Business Tax With VAT" On Service Industry Innovation

Since 2012,the slowdown of GDP growth in China marks that economic development has entered a new normal.Value added tax replaces business tax(hereinafter referred to as "replacing business tax with VAT")is an important step to complete the reform of financial and tax system under the new status.Although the purpose of "replacing business tax with value-added tax" is to reduce the tax burden of enterprises in the whole industry through structural tax reduction,due to the complex business,large investment in the early stage of operation,difficult to obtain VAT input invoice and other problems in the transportation service industry,construction industry,financial industry and telecommunications industry,the tax burden will not be reduced but increased instead."Business tax to VAT" will help to break through the deduction chain between the two or three industries,and eliminates the distortion of double taxation to the business operation.Theoretically,the tax neutrality principle of turnover tax has been realized.The original applicable valueadded tax enterprises purchased various technical services after "replacing business tax with value-added tax" to form the input tax deductible for value-added tax,reduce the purchase cost of enterprises,and enhance the willingness of outsourcing services;the original applicable business tax enterprises purchased materials,equipment and intangible assets after "replacing business tax with value-added tax" to deduct the payable value-added tax,and the purchase cost of service enterprises decreased.Innovation driven is an essential key element in the stable and healthy development of the economy.The positive externality of innovation results in the marginal income of R&D investment less than the marginal cost,and the total demand of new technology greater than the total supply.At this time,we need to adjust the tax policy,guide the flow of resources to high-tech enterprises,and improve the supply of innovation.The structural tax reduction of "replacing business tax with value-added tax" reduces the tax burden,alleviates the capital pressure of enterprises,opens the inter industry deduction chain to realize the deduction of fixed assets and operating costs,promotes the rapid development of service industry under the favorable policies,increases the number of outsourcing service enterprises and the contract amount rapidly,and increases the market competition pressure of service industry.According to the research conclusions of arrow and Aghion et al on the relationship between competition and innovation,rising competition pressure will promote enterprises to increase R&D innovation.It is possible for enterprises to increase their R&D expenditure when they are rich in funds and strengthen their core competitiveness through innovation so as to seek long-term sustainable development.The research topic of this paper is the impact of "replacing business tax with value-added tax" on service industry innovation.Foreign literature has combed the relationship between tax system and economic growth,as well as the impact of valueadded tax on economy.Most of the domestic literature is to explore the economic effect of value-added tax through the study of "replacing business tax with valueadded tax".This paper collates the relevant domestic literature of "replacing business tax with value-added tax" from three aspects:tax reduction effect,industrial upgrading effect and innovation effect.In the theoretical analysis,from the four changes of structural tax reduction,fixed assets deduction,business cost deduction and service outsourcing brought about by "replacing business tax with value-added tax",it is clarified that "replacing business tax with value-added tax" can promote the increase of R&D investment of enterprises through three aspects:saving enterprise funds,encouraging equipment innovation and optimizing market environment.The empirical research data comes from various enterprise information provided by wind database and guotai'an database,excluding the enterprises with abnormal operation and missing data in most years,and finally selecting 200 A-share listed service companies as samples,and selecting some core financial indicators of enterprises in 2008-2018 to build panel data.The empirical test is divided into two parts.The first part uses the double difference method and the double difference tendency score matching method to study the innovation impact of "replacing business tax with value-added tax" on the first batch of pilot industries.The enterprises in the experimental group come from some modern service industries affected by the "replacing business tax with value-added tax" policy.The enterprises in the control group are selected from the four industries finally included in the "replacing business tax with value-added tax".The empirical results show that the policy of "exchanging value-added tax for business tax" will promote some modern service enterprises and increase their R & D innovation investment.The total assets scale,capital expenditure ratio,net interest rate and turnover rate of total assets are positively related to innovation investment.The growth rate of total assets and debt to assets ratio of enterprises are negatively related to innovation investment.After the state-owned enterprises and municipal enterprises are excluded from the robustness test The empirical results are still significant,"replacing business tax with valueadded tax" can promote the R&D investment of ordinary private enterprises.The second part of empirical analysis further verifies the construction industry,real estate industry,financial industry and life service industry which are finally incorporated into the "business to value-added",and clarifies the mechanism of "business to valueadded" for service enterprise innovation.In the further empirical study of "four industries",the enterprises in the municipality directly under the central government are taken as the experimental group,and the enterprises in other provinces and cities are taken as the control group.The double difference empirical results show that although the significance of the innovation effect of "replacing business tax with value-added tax" policy is weakened,it is still effective.In the mechanism analysis,herfindahl index is selected as the intermediary variable to measure the market competition degree of the industry where the enterprise is located.The test results of the intermediary effect show that "replacing business tax with value-added tax" improves the competition level of various industries in the service industry,and the stronger competition pressure urges the enterprise to increase the R&D investment.The market competition pressure,as part of the intermediary effect,transmits the innovation effect of "replacing business tax with value-added tax" policy on the service industry Should.Based on the research conclusion,this paper suggests that the government can use the preferential tax policies of immediate collection,immediate refund and input tax plus deduction to help the development of key industries or enterprises,pay attention to the policy strength,grasp the neutral characteristics of value-added tax,reduce tax distortion,and create a dynamic market competition environment.Enterprises should improve their ability of governance,optimize the operation of funds,and actively understand and master the new tax policy.