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5929Tax reduction is an important part of cost reduction that it has attracted the continuous attention of the government. As tax is one of the main sources of government revenue, the local government plays an important role in the tax reduction process. Meanwhile, it is worth noting that the local government is a rational agent, and it has diversified behavior under the development of economical society. Fully understanding the differences of local governments’ income tax reliance behavior will help to identify the obstacles in the process of cost reduction and ensure the implementation of cost reduction. Using Chinese A-share listed companies from 2003 to 2016 and taking enterprise income tax stickiness as the micro-measurement of local governments’ income tax reliance behavior, this paper mainly studies the following questions: First, does the income tax reliance behavior of local governments differ due to enterprises’ property rights and the level of control as enterprises’ profit decline? Second, what factors will moderate the income tax reliance behavior of local governments? Third, will local governments give more financial subsidies to enterprises while they have more income tax reliance on enterprises? This paper finds that the local government shows more income tax reliance on state-owned enterprises, especially on local state-owned enterprises. Further research finds that the promotion pressure, financial pressure, economic cycle, the regional proportion of state-owned enterprises and the government intervention moderate local governments’ income tax reliance behavior. In addition, local governments give more financial subsidies to state-owned enterprises while they have more income tax reliance on state-owned enterprises. This paper makes several contributions. First, based on the existing researches of Anderson, et al.（2003）and Wang, et al.（2018）, this paper analyzes enterprise income tax stickiness from the perspective of local governments. Using enterprise income tax stickiness as the micro-measurement of local governments’ income tax reliance behavior, this paper enriches the research content of income tax stickiness and the research methods of local governments’ tax reliance behavior. Second, this paper finds that the income tax reliance behavior of local governments is more significant in state-owned enterprises, especially in local state-owned enterprises. These findings add to the literature which examines the effect of property rights and corporate tax burden. At the same time, this paper analyzes the factors which will moderate local governments’ income tax reliance behavior, such as promotion pressure, financial pressure, etc, and it provides a comprehensive understanding of local governments’ income tax reliance behavior. Third, this paper examines the relationship between local governments’ income tax reliance behavior and enterprises’ financial subsidies. This has deepened the understanding of the relationship between local governments and enterprises in returning peaches and plums.
/ Journals / Journal of Finance and Economics
Journal of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YaoLan BaoXiaohua HuangJun, Vice Editor-in-Chief
Who Is More Vulnerable to the Income Tax Reliance Behavior of Local Governments: State-owned Enterprises or Non-state-owned Enterprises?
Journal of Finance and Economics Vol. 46, Issue 01, pp. 155 - 168,封三 (2020) DOI:10.16538/j.cnki.jfe.2020.01.011
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Cite this article
Liu Bin, Wu Di, Zhang Lieke. Who Is More Vulnerable to the Income Tax Reliance Behavior of Local Governments: State-owned Enterprises or Non-state-owned Enterprises?[J]. Journal of Finance and Economics, 2020, 46(1): 155-168.
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