Tax Cut Policy, Business Environment and Enterprises High-quality Development: Evidence from China

Abstract

Under the background of high-quality development, the support of fiscal policy is important for enterprises to achieve high-quality development. As a major initiative to promote the supply-side reform in China, can tax cut policy promote the high-quality development of enterprises? In order to explore this question, based on the data of China’s listed companies from 2015-2019, this paper finds that: (i) Tax cut policy can improve the total factor productivity of enterprises and empower their high-quality development. (ii) The impact is different for companies in different regions and firms with different nature of property rights. Tax cut policy can better promote the high-quality development for companies in central regions and state-owned enterprises in China. (iii) The optimization of business environment effectively strengthens the positive effect of tax cut policy on the enterprise high-quality development. The effect of tax cut policy on total factor productivity is more obvious for companies in better business environment.

Keywords

• taxation
• high-quality development
• business environment
• moderation effect