Research On The Influence Of Tax Competition On Market Segmentation Under The Background Of National Unified Large Market

The new development pattern calls for accelerating the construction of a unified national market,reviewing and abolishing relevant policies in various regions that hinder the construction of a unified market,such as local protection and market segmentation,and promoting the smooth flow of commodity factors and resources in a wider area.The existence of market segmentation is not conducive to deepening the advantages of division of labor and giving play to economies of scale.It is a kind of closed small market and self-cycle.Breaking market segmentation and unblocking points in the economic cycle are of great significance for speeding up the building of a unified national market with fair competition and full opening.The crack of market segmentation not only needs a fair competition market environment,but also needs to play the necessary coordination function for the government.Market competition is conducive to standardize the market,and then promote market efficiency and scale expansion.As a way of government competition,inter-governmental tax competition may also promote local development,optimize resource allocation and promote resource flow just like market competition,so as to weaken market segmentation and promote the construction of a unified national market.Local tax competition is mainly adopt the method of reducing tax burden,on the one hand,low taxes will promote the development of local economy and enterprises,expand local products flow to the other place,on the other hand can increase the attraction of the outside resources in this region,resulting in increased mobility of resources,may reduce the market segmentation to the construction of unified national market.However,local tax competition may not be conducive to the establishment of a fair market by creating a "tax depression" to protect local enterprises.Therefore,under the background of accelerating the construction of national unified market,it is necessary to clarify the relationship between local tax competition and market segmentation,and identify the role played by local tax competition in the construction of national unified market.Based on the existing research,this paper introduces the formation reasons and main forms of horizontal tax competition among provincial local governments in China,as well as the relevant facts of tax competition and market segmentation,and puts forward the research hypothesis based on the relevant theoretical basis and mechanism analysis.The "price method" is used to measure the degree of market segmentation between Chinese provinces from 2003 to 2019.The difference of relative tax burden in each province is used to identify the mechanism and influence results of tax competition on market segmentation through two-way fixed effect model.There are obvious differences in the degree of tax competition among eastern,central and western China,which provides a basis for identifying the nonlinear impact of tax competition on market segmentation.Based on the benchmark regression,this paper studies the impact of local tax competition on market segmentation in eastern,central and western regions respectively,and explores the impact of tax competition on market segmentation heterogeneity under different competition intensities.Finally,in order to avoid endogeneity,this paper mainly adopts the following methods: one is to introduce the explanatory variable lag into the model in the first order;Second,the endogeneity test was carried out by instrumental variable method.Third,replace the explanatory variables to test the robustness of the empirical results.The results show that:(1)Since 2003,the degree of domestic market segmentation has shown a trend of gradually weakening,and in the weakening process,there are a few years of increasing;There are significant differences among eastern,central and western regions,and the central region has the lowest degree of domestic market segmentation.From the provincial level,the changes of domestic market segmentation degree in each province are relatively stable,and the overall trend is decreasing year by year.(2)The highly centralized and unified tax legislative power in China limits the space for vicious local tax competition,and the tax competition among provincial levels plays a stronger role in regulating the market,which can reduce the degree of market segmentation and promote the establishment of a large unified market;From the perspective of tax division,both value-added tax and corporate income tax competition have weakening effects on market segmentation.In terms of impact degree,total tax competition has the strongest effect on market segmentation,and income tax competition weakens market segmentation more than value-added tax competition.(3)The obvious differences in tax competition among the three regions of China provide a strong basis for identifying the mechanism of tax competition affecting the national unified market.Tax competition for market segmentation effect obvious nonlinear relationship,the influence of tax competition influence results in different area is different,the eastern region,the degree of competition is low tax competition will further reduce regional market segmentation,but in the third degree of competition areas,tax competition to the unified market does not work effectively,It may even exacerbate regional market fragmentation.Mechanism combined with theory analysis and empirical test results,this paper puts forward the corresponding suggestion,one is even tax competition to a certain extent,can reduce the market segmentation,promote the construction of the national unified big market,but not on behalf of the tax competition is the effective measure to solve the market segmentation,a higher degree of tax competition may exacerbate regional market segmentation.Therefore,it is necessary to strengthen the institutional rules and maintain the tax competition in the appropriate range.Second,in the construction of the unified market,we should grasp the relationship between unity and moderate difference.According to the research results of different regions,different regions need to implement differentiated governance according to local conditions to crack market segmentation.Third,in order to avoid fierce and vicious tax competition among regions,we should promote the interconnection of regional tax policies,grasp the key points of unified market construction,give full play to the comparative advantages of various regions,and regulate improper market intervention.Fourth,in order to better play the function of tax regulation needs to create a good market environment.The regulation function of tax can promote the rational distribution of resources.Differentiated tax policies are necessary for the coordinated development of China’s regions,but the regulation function of tax needs a good market environment to provide the foundation,and then promote the formation of a unified national market.