Effective tax rate （ETR） measures the tax payment burden, which is a comprehensive reflection of a series of behaviors of enterprises and government departments in the whole process of tax administration. According to tax laws, the difference of business essence will lead to differentiated tax treatments, resulting in the difference of ETRs based on tax laws. At the same time, due to the fact that tax elements stipulated in the law are not clear and specific, it creates conditions for local government departments to derive discretion. Therefore, local governments are able to influence the ETR of enterprises within the scope of laws according to their own interests, which leads to the difference of ETRs based on local discretion. So, how to understand the two source factors of ETR differences? Do they contain the reasonable optimization path of China’s tax system?
In general, there are few comprehensive and systematic studies on the causes of different ETRs of enterprises. Therefore, continuing the ideas of the existing literature, this paper starts from the ETR of enterprises in the same industry, taking the manufacturing industry as an example. Firstly, it verifies the existence of different ETRs of enterprises in the same industry. Secondly, it constructs a theoretical framework based on tax administration, dividing the source factors of tax differences into two categories: One is from tax laws, and the other is from local discretion in tax administration. Finally, it uses the Shapley value decomposition method to analyze the static contribution level and dynamic trend of the two factors, and discusses the heterogeneity between different regions. The results show that: （1） Tax law factors and local discretion factors are the main sources of different ETRs, and the former’s contribution is obviously higher than the latter. （2） On the one hand, the factor contribution from tax laws to different ETRs has been maintained at a high level; on the other hand, the factor contribution from local discretion shows a significant downward trend. It has proved the significant regional heterogeneity in the contribution of the two factors to different ETRs. （3） Based on the above results, this paper finally constructs the Tax Legalization degree index, and its dynamic trend shows that the construction of Tax Legalization in China has achieved remarkable results from 2007 to 2019. The marginal contribution of this paper lies in that: Firstly, it systematically explores the causes of different ETRs of enterprises in the same industry, and improves the theory of the difference in ETRs. Secondly, it uses the Shapley value decomposition method to quantitatively verify the relative contribution and trend of the two factors, and depicts the real environment of tax collection and management in China from a new perspective.