Title: Analysis of the influence of tax structure on urban innovation: based on panel data analysis of 31 provinces in China

Authors: Peng Jiang; Jinjing Zhang

Addresses: Business School, Shandong Normal University, China ' School of Public Finance and Taxation, Central University of Finance and Economics, China

Abstract: Innovation is the first power to lead China's development, and the promotion of urban innovation is an important support to strengthen the core competitiveness of cities and build a modern economic system. Using panel data of 31 provinces in China during 2005-2016 period, we establish a random effect model to analysis the effects of tax structure on urban innovation. We find that the increase in the proportion of indirect tax revenue to total tax revenue will significantly inhibit urban innovation, and the increase in the proportion of direct tax revenue to total tax revenue will significantly promote urban innovation. Accordingly, in order to improve the urban innovation, it is advisable to further optimise the tax structure, expand the scale of individual income tax revenue, promote the legislation of real estate tax, and gradually narrow the revenue gap between indirect tax and direct tax in China.

Keywords: tax structure; urban innovation; indirect tax; direct tax; China.

DOI: 10.1504/IJCCM.2022.123082

International Journal of Chinese Culture and Management, 2022 Vol.5 No.2, pp.141 - 153

Received: 14 Jan 2021
Accepted: 02 Mar 2021
Published online: 26 May 2022 *

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