The quality of local government fiscal revenue is a concentrated embodiment of the high-quality development of the local economy, and also the key for local governments to prevent and resolve fiscal risks and promote high-quality fiscal development. Fiscal pressure and tax competition is an effective perspective for analyzing the quality of fiscal revenue. Fiscal pressure is the fiscal dilemma commonly faced by local governments under the existing fiscal system in China, and tax competition is a common behavior strategy for local governments to cope with fiscal pressure. First, this paper uses the panel data of 30 provinces in China from 2010 to 2017 to construct a comprehensive indicator system for the quality of local government fiscal revenue to measure the quality of local government fiscal revenue. It is found that the absolute level of the quality of local government fiscal revenue in China is low, the improvement speed is slow, and the quality of fiscal revenue in developed areas is significantly higher than that in underdeveloped areas. Then, based on the typical fact of China’s “pressure-type” fiscal system, through the establishment of a measurement model to empirically test the direction and size of the impact of fiscal pressure on the quality of local government fiscal revenue, it is found that the various behavior strategies adopted by local governments to cope with fiscal pressure will significantly inhibit the quality of local government fiscal revenue in China. Finally, in order to further reveal the role channels of fiscal pressure affecting the quality of local government fiscal revenue, tax competition is selected as the channel variable for empirical testing. The results show that: From the national level, fiscal pressure inhibits the quality of local government fiscal revenue by promoting local government tax competition; from the perspective of sub-regions, tax competition is still a channel for the fiscal pressure of developed and underdeveloped areas to affect the quality of local government fiscal revenue, but local governments in developed areas prefer to use tax competition to cope with fiscal pressure. The quality of local government fiscal revenue, as the basis and guarantee of fiscal policy “improving quality and efficiency”, is of great significance to the high-quality development of China’s economy and finance, and in the context of fiscal pressure, the quality of local government fiscal revenue has considerable room for improvement. Based on the research conclusion, policy suggestions are put forward from the aspects of strengthening budget management, improving the local tax system, preventing and resolving local government debt risks, establishing a scientific, reasonable and binding local government fiscal revenue quality assessment system, and establishing a phased subsidy mechanism for less developed areas.
/ Journals / Journal of Shanghai University of Finance and Economics
Journal of Shanghai University of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
GuoChanglin YanJinqiang WangWenbin WuWenfang, Vice Editor-in-Chief
Fiscal Pressure, Tax Competition, and Quality of Local Government Fiscal Revenue
Journal of Shanghai University of Finance and Economics Vol. 24, Issue 06, pp. 32 - 47 (2022) DOI:10.16538/j.cnki.jsufe.2022.06.003
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Shen Liang, Liu Hao. Fiscal Pressure, Tax Competition, and Quality of Local Government Fiscal Revenue[J]. Journal of Shanghai University of Finance and Economics, 2022, 24(6): 32-47.
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