Tax Arrangement and Regional Industrial Restructuring: Evidence from Panel Data in China

Regional industrial restructuring has been one of the major items in the transformation of economic development mode. An exploration was made into the influence of tax arrangement on the regional industrial structure by setting up a panel data econometric model based on the evaluation and analysis of the regional industrial structure in China. It was shown that tax arrangement influenced the regional industrial restructuring in terms of three aspects. Microlevel: the turnover tax and income tax appeared with a U-path of influence on upgrading of the industrial structure while appearing with an inverted U-path of influence on rationalization of the industrial structure. In addition, the levy of resource tax had a negative impact on both upgrading and rationalization of the industrial structure. Mesolevel: taxation in the secondary and tertiary industries appeared with a U-path of influence on upgrading of the industrial structure. An increase of taxation in the secondary industry had a negative impact on rationalization of the industrial structure. The taxation in the tertiary industry appeared with an inverted U-path of influence on rationalization of the industrial structure. Macrolevel: the macrotax burden had a U-path of influence on both upgrading and rationalization of the industrial structure.