Research Team of Professor Li Hua from the School of Economics Makes New Progress in Promoting the Construction of a Unified National Market Through Taxation

Recently, the research achievement How Does the Universal Tax Collection and Administration System Affect Cross-regional Capital Flow? by Professor Li Hua from the School of Economics, Shandong University, and doctoral candidate Wang Aiai was published online in The Journal of Quantitative & Technical Economics, an authoritative journal.

Since the Third Plenary Session of the 18th Central Committee of the Communist Party of China, building a unified national market and strengthening the unification of basic market institutional rules have become the core tasks of a series of reforms to realize Chinese-style modernization, and are also research hotspots focused on the academic community. At present, the resource allocation distortion and efficiency loss caused by the segmentation of the capital factor market have become a constraint factor for the high-quality development of China's economy. In the complex international environment where the global economy is mired in a "long-term stagnation" pattern and protectionism and unilateralism are on the rise, accelerating the cross-regional flow of capital factors and unblocking the domestic economic cycle are undoubtedly the core essentials to activate the endogenous driving force of China's economic development. It is of important theoretical value and practical significance to deeply explore the institutional requirements for the unification of the capital market.

From the perspective of institutional universality, this paper analyzes the practical effect and internal mechanism of the merger of national and local tax bureaus in promoting cross-regional capital flow. As a major tax system reform aimed at adjusting and optimizing the functions of tax authorities and improving policy transparency and law enforcement uniformity, the merger of national and local tax bureaus has significantly improved the universality of the tax collection and administration system nationwide by implementing vertical management of tax authorities and strengthening the independence of tax collection and administration, becoming one of the key top-level designs to promote the construction of a unified national market through institutional reform. In view of this, this paper takes the merger of national and local tax bureaus as a quasi-natural experiment and uses the difference-in-differences method to deeply explore the impact of the universal tax collection and administration system on cross-regional capital flow.

The research conclusion shows that the universal tax collection and administration system of the merger of national and local tax bureaus has a significant promoting effect on cross-regional capital flow, especially in manufacturing enterprises, non-state-owned enterprises and high-tech enterprises. Mechanism analysis finds that the promoting effect mainly stems from the reduction of institutional transaction costs of off-site investment and the reduction of local investment tax incentives. In terms of resource allocation efficiency, the merger of national and local tax bureaus helps alleviate the problem of capital flowing to tax depressions caused by local government tax competition, and promotes capital to flow to regions with higher production efficiency. In addition, the merger of national and local tax bureaus can also weaken the substitution of the international market for the domestic market caused by market segmentation, narrow the gap in regional economic development, and promote common prosperity.

This paper has important enlightenment for fully understanding the institutional requirements for the unification of the capital market, promoting the implementation of universal institutions and optimizing the tax collection and administration system. In the context of building a unified national market, we should comprehensively improve institutional universality, focus on the differences in policy implementation effects, and accurately identify the blocking points of factor flow. At the same time, it is necessary to accelerate the reform of the fiscal system, strengthen the central tax collection and administration authority to improve the independence of tax collection and administration, and clarify the conditions and standards for tax inspection, tax administrative punishment and tax preferences to reduce the institutional transaction costs of enterprises when investing across regions due to the lack of rules.

Li Hua is a Professor and Ph.D. Supervisor at the School of Economics, Shandong University, and Director of the Tax Economic Research Center of Shandong University. She holds a Ph.D. in Public Finance from the Chinese Academy of Fiscal Sciences and a postdoctoral degree in Applied Economics from Xiamen University. She has long been engaged in research on fiscal and taxation theories and policies. She has published more than 70 academic papers in core journals such as The Journal of Quantitative & Technical Economics, China Soft Science, Finance & Trade Economics, Public Finance Research, and Taxation Research. She has presided over and participated in many national fund projects and major research projects of government departments. She has published monographs such as Research on the Direction and Path of Optimizing China's Tax Structure and The Evolution Path of Intergovernmental Fiscal Relations: Political Competition and Economic Rationality. Her achievement Research on the Mechanism and Effect of China's Tax System in Promoting Fair Distribution was selected into the 2024 National Philosophical and Social Sciences Achievements Library.