مقاله انگلیسی رایگان در مورد تأثیر مشوق های مالیاتی سرمایه گذاری – اسپرینگر 2018

Introduction

Investment is one of the most important factors determining economic fluctuation in the short run and economic growth in the long run. For this reason, governments in many countries have long been engaged in designing policies to affect business investment, with the investment tax credit a prominent instrument. Empirical findings, however, vary substantially regarding the size and robustness of the impact of taxation on business investment. This paper provides new evidence on the impact of taxation on firm investment expenditure, taking advantage of variations in the tax credit across both regions and industries that are brought about by the 2004 Chinese value-added tax (VAT) reform pilot. China’s VAT was introduced in the 1994 fundamental tax reform. In part to curb the then rapid investment growth and overheating economy, the tax was of production type—firms’ purchases of investment goods were not deductible from the value of final products as the VAT base. Over time, there have been increasing concerns over the disincentives to firm investment due to this double taxation. In 2003, the central government decided to permanently convert the VAT to one of consumption type, which allows the deduction of investment expenses. The reform pilot that started in 2004 applied to firms in six broadly defined manufacturing industries located in the three provinces of the Northeastern (NE) region. It was expanded to 26 more cities in central China in 2007 and was implemented nationwide at the beginning of 2009. Focusing on the 2004 reform pilot, we estimate the effect of the VAT reform on the investment of eligible firms. The 2004 VAT reform pilot is a rare situation for a tax change in which the eligibility is unambiguously defined by time, region, and industry. This allows us to achieve credible identification of the effect of the tax change on eligible firms in a difference-in-differences (DID) framework, where the treatment and control groups are selected based on an exogenous eligibility rule. We employ data from the Annual Survey of Industrial Firms for 2000–2007. We use firms in the ineligible industries in the NE region to control for region-specific trend in investment and all firms outside the NE region to control for industry-specific trend in the absence of the tax reform. We control for firm characteristics that may independently affect firm investment. Once these confounding factors are removed, the extra increase in fixed investment by firms in the eligible industries in the NE region can be attributed to the investment tax credit due to the VAT reform. Our main findings are the following. First, we show graphically that while the treatment and control groups follow the same investment trend before the reform, their investment behavior diverges sharply after the reform, with the treatment group showing substantial increases in 2005 and 2007. We find in regression analyses that the tax credit raises significantly the fixed investment of eligible firms by 28% on average during 2004–2007 relative to 2001–2003, corresponding to a user cost elasticity of 1.84.