The Impact Of Tax Reduction And Fee Reduction On The Efficiency Of Local Fiscal Expenditure

In recent years,China’s economic development has entered a new normal,transforming from a stage of high-speed development to a stage of high-quality development.To counter the negative impact of downward economic pressure,vanishing demographic dividend and COVID-19,China has implemented a series of tax and fee reduction policies to promote high-quality economic development through supply-side structural reform.As a proactive fiscal and tax policy,tax and fee cuts have played an important role in stimulating market demand,easing the burden on enterprises and adjusting income distribution.However,the continuous implementation of large-scale tax and fee reduction policies has alleviated the impact of economic fluctuations,but also intensified the financial pressure on local governments,resulting in high debt.Based on this,this thesis will deeply explore how tax and fee cuts affect local government spending behavior through fiscal pressure,and test the impact of tax and fee cuts on the efficiency of fiscal spending.Based on the panel data of 273 Chinese cities from 2012 to 2018,this thesis uses the DEA-BCC model to measure the efficiency of fiscal expenditure,and establishes the panel Tobit model to test the effect and mechanism of tax and fee reduction on the efficiency of fiscal expenditure,and analyzes its possible heterogeneity.The main conclusions of this study are as follows: First,the policy of tax and fee reduction has made the contradiction between fiscal revenue and expenditure of local governments more prominent.Under the pressure of stabilizing economic growth,local governments have to face the double pressure of tax and fee reduction and fiscal expenditure expansion.To this end,local governments can relieve the financial pressure by improving the efficiency of fiscal expenditure,reduce the burden on enterprises and individuals,and promote economic development at the same time,thus providing more fiscal space for tax and fee reduction.Second,under the background of tax and fee reduction policies,in order to relieve the financial pressure,the government increases the natural expenditure,optimizes the structure of fiscal expenditure,improves the efficiency of fiscal fund allocation,provides fiscal space for the tax and fee reduction policies,and thus improves the efficiency of fiscal expenditure.Third,due to certain differences in the level of economic development in different regions,the implementation of tax and fee reduction has different effects on the efficiency of local fiscal expenditure,namely,the improvement effect of tax and fee reduction on the efficiency of local fiscal expenditure in eastern and central regions is more significant.When implementing tax reduction and fee reduction policies of the same intensity in different regions,the higher the degree of financial self-sufficiency of local governments,the lower the scale of the government within a certain range,the local governments can have relatively independent financial resources to adjust fiscal expenditure,which is conducive to the optimization of the implementation environment of tax reduction and fee reduction policies,and the higher the efficiency of fiscal expenditure of local governments.Based on the theoretical analysis and empirical analysis,this thesis,combined with our specific national conditions,puts forward improvement suggestions from three aspects in order to better exert the positive impact on the efficiency of fiscal expenditure in the policy of tax reduction and fee reduction.First,firmly implement the policy of tax reduction and fee reduction and comprehensively realize the policy of tax reduction and fee reduction to improve the efficiency of fiscal expenditure.Second,strengthen the management of financial expenditure.Third,we will create a favorable environment for implementing tax and fee cuts and provide public services efficiently.