Research On The Influence Of Political Connection On The Tax Burden Of Enterprises

In June 2022,the General Office of the Central Committee of the Communist Party of China(CPC)issued the "Provisions on the Management of Leading Cadres’ Spouses,Children and Their Spouses in Business Enterprises",which clearly stated that the applicable objects of the management of leading cadres’ spouses,children and their spouses in business enterprises are mainly leading cadres at the level of Party and government organs,mass organizations,enterprises and public institutions,bureaus and bureaus,and above the equivalent level;The situation of business enterprises mainly includes investing in and starting enterprises,holding senior positions in private enterprises or foreign-funded enterprises,private equity fund investment and employment,and engaging in paid social intermediary and legal services.The Regulations put forward the prohibition requirements for the spouses,children and their spouses of different levels and categories of leading cadres to run businesses.The higher the level of leading cadres,the more stringent the requirements.The comprehensive department is more stringent than other departments.This notice indicates that the state has begun to focus on cracking down on the behaviors of leading cadres who use their power to provide convenience and seek private interests for their spouses,children and their spouses to run businesses.In recent years,more and more enterprises have chosen to go to government departments as "cadres" and run for NPC deputies,and some former NPC deputies have chosen to do business overseas.Will the relationship between the governments formed by entrepreneurs reduce the tax burden of enterprises through power rent-seeking,or take the initiative to assume more social responsibilities? And then affect tax fairness?This thesis selects 806 listed manufacturing companies in 2018-2021 for empirical research,selects panel fixed effect model for regression analysis,and finds that there is a significant positive correlation between the degree of political connection and the tax burden of enterprises.The tax burden of enterprises with political connection is higher than that of enterprises without political connection,and the higher the degree of political connection,the higher the tax burden.It shows that the executives or actual controllers of enterprises with political affiliation,as former government officials,deputies to the National People’s Congress or members of the CPPCC,the higher the degree of political affiliation,the higher the supervision of the government,making it difficult for enterprises to evade tax burden by hiding income and other methods,and the executives of enterprises with political backgrounds have high prestige and political status in society,in order to maintain the social image and status of themselves and enterprises,They are more inclined to pay taxes strictly according to regulations,and thus bear more tax burden.Although there is a significant positive correlation between the degree of political connection and the tax burden of enterprises,the correlation coefficient is small,only 0.0006,which indicates that the acceleration of China’s modern legal system construction and the implementation of the "tax statutory" policy have greatly improved the corresponding laws and regulations,and have some control over the phenomena of unclear expression,vague concept,large randomness of tax preferences,and too many backdoor clauses,China has made considerable progress in optimizing the business environment and promoting tax fairness.According to the research results of this thesis,it is proposed to further improve the relevant legal system and promote social equity.To improve the legal system of government regulatory departments,policies should be formulated with unified and clear regulations,and various rules and regulations should be strictly enforced to clarify the rights and responsibilities of each department,in order to reduce the discretionary power of enterprises in the process of policy implementation.Emphasis should be placed on tax design for businesses such as e-commerce,mobile internet,and third-party payments,and the Tax Collection and Management Law should be further revised in conjunction with economic forms.In addition,strengthen the supervision of non politically related enterprises,reduce their tax avoidance motivation,and better promote the realization of tax fairness.