Research On The Impact Of Urban Agglomeration Development On Local Government Tax Competition

In recent years,with the rapid growth of China’s economy and the increasing level of urbanization,the organizational form of urban agglomeration has become more and more important in China,which has also led to some changes in the way local governments interact.China has a vast territory and obvious spatial imbalance in its economic development level.Under the tilt of regional preferential tax policies,there are differences in tax burdens between different places,and in order to attract enterprises that promote local economic growth,local governments will adopt various means such as tax policies to attract the inflow of economic resources.Based on the relevant research theory of tax competition model from the perspective of new economic geography,this paper studies the relationship between economic agglomeration and tax competition in urban agglomerations.Urban agglomerations can be seen as a centralized network of transactions between cities,and the incremental scale rewards brought about by the agglomeration of production factors between cities promote the economic growth of urban agglomerations.In the tax competition model from the perspective of new economic geography,the existence of economic agglomeration makes there be a tax rate gap between the central and peripheral areas.Therefore,hypothesis 1 is proposed: urban agglomeration cities can tax "agglomeration rent",so local governments will increase the macro tax burden,and the capital factors in the region will not be lost.Hypothesis2: Compared with urban agglomerations with high development levels,urban agglomerations with lower development levels have a lower degree of economic agglomeration,local governments may not tax agglomeration rents,and the intensity of tax competition before and after joining urban agglomerations has not changed significantly.First,a spatial Dubin model is constructed for benchmark regression and analysis,followed by robustness testing,and a double difference model is used for mechanism testing.According to the empirical test,three conclusions are drawn: First,in China,the macro tax burden of prefecture-level cities shows a positive correlation in space,and all cities in urban agglomerations have tax competition behavior,and the tax negative response coefficient is positive.Second,indicators that reflect the city’s comprehensive strength,such as the city’s economic development level,infrastructure construction and financial development,have a positive effect on the city’s tax burden.These economic characteristics help urban agglomerations form agglomeration effects and attract human,capital and other factors to flow into the region.Third,the mechanism test found that after the implementation of the urban agglomeration policy,the macro tax burden of developing large and cultivating development-oriented urban agglomerations increased,and attracted more capital inflows,which indirectly indicates that the economic agglomeration effect generated by urban agglomerations provides enterprises with "agglomeration rent".Due to the differences in the institutional environment and fiscal and taxation application capabilities of urban agglomerations at different stages of development,how to ease local government tax competition requires categorical guidance and group-specific policies.This paper puts forward three policy suggestions,one is to focus on cultivating development-oriented urban agglomerations and forming economic agglomeration advantages.The second is to promote the transformation of optimized urban agglomerations and improve local fiscal and tax governance capabilities.The third is to deepen cooperation between cities and accelerate the construction of a regional profit and tax coordination and sharing mechanism.