Impact Of Tax Incentives On New Energy Enterprises’ Technological Innovation

With the proposal of China’s carbon neutrality in 2060,new energy industry,which is significant to promote the transformation of energy structure,the green economic growth and the achievement of net-zero emissions in 40 years,has attracted more and more attention from all walks of life.As one of the strategic emerging industries in China,the development of new energy industry is drove by technological innovation.And its "emerging" characteristics also highlight the necessity of government support,of which the tax incentive is an important one that has been widely implemented.Researches have been conducted to respectively study new energy tax policies and innovation,while there have relatively few studies that focus on the impact of tax incentives on new energy enterprises’ technological innovation.This paper studies the impact of tax supports on the technological innovation of new energy enterprises in China from the perspective of value-added tax(VAT)incentives.Using the micro data covering 2003-2012 of Chinese new energy enterprises,we investigate the relationship of new energy VAT incentives and the enterprises’technological innovation by adopting the Difference-In-Difference(DID)approach since there has a dual difference of 2008 VAT incentives within new energy industry.Moreover,the heterogeneity and the economic mechanism of VAT incentives affect new energy enterprises’ innovation are also studied through the cost-benefit analysis.Empirical results show that the VAT incentives mainly affect the invention patents of new energy enterprises,while its non-invention and the total innovation patents are not significantly affected.The Ⅳ regressions present that the number of invention patents granted by the tax-favored new energy enterprises decreases by about 3.99%compared with its counterparts.In addition,the negative effect of VAT incentives is larger in the small scale,state-owned and non-eastern new energy enterprises.Further studies show that the cost and benefit of new energy VAT incentives may mismatch.Specifically,new energy enterprises are inclined to use the surplus funds to expand the existing production capacity rather than the research and development,since the VAT incentives are not specified to stimulate technological innovation.The expansion of production capacity indeed brings positive effects to enterprises’ technological innovation due to the economies of scale.However,the positive effects may be smaller than the cost caused by ignoring R&D and innovation.This ultimately makes VAT incentives present a negative impact on new energy enterprises’ innovation patents.Finally,this paper proposes some policy implications for the optimization of the existing tax incentive system and the improvement of the technological innovation of new energy enterprise,based on the results of the empirical analysis and the current situation of China’s new energy development and tax supports.