Summary:
Under the backdrop of a global economic downturn, tax incentive policies can help firms alleviate financial pressure and sustain production capacity, thus nurturing the potential for fiscal revenue and economic growth. However, under the influence of multiple factors, fiscal operations are in a “tight balance”, and tax incentives further exacerbate fiscal revenue and expenditure contradictions, also leading to policy inequality issues among firms, causing deadweight losses. Therefore, it is necessary to analyze the cost-effectiveness of tax incentives from the perspectives of fiscal revenue and expenditure and socio-economic development, so as to advance policy optimization. The tax expenditure system requires the scale of tax incentives to be measured from the perspective of deviation from the baseline tax system and to conduct cost-benefit analysis, which highly aligns with current realities, but related research and practices are in slow progress. Existing literature mainly focuses on the concept and content analysis of tax expenditures and their theoretical and institutional exploration in China, yet little literature focuses on the crucial step of cost-benefit analysis in tax expenditure management. This paper selects the representative policy of additional deductions for R&D expenses in corporate income tax, calculates the direct tax benefits and costs of its implementation from the perspective of tax expenditures, and evaluates its effectiveness.In the benefit analysis, the difference-in-differences model is adopted, data from publicly listed companies is used to measure the impact of the reform on corporate performance, and a series of robustness tests are conducted. Tax revenue is calculated based on regression coefficients. In cost assessment, the revenue forgone method is used to measure the tax costs with reference to the calculation approach commonly used internationally and the “Guide to China's Tax Expenditure Calculation Method” jointly compiled by the Ministry of Finance and Tsinghua University. The results show that this policy increases the return on total assets of enterprises by 1%, and it remains robust while considering the impact of competitive reforms such as “Business Tax to VAT”, VAT rate reform and accelerated depreciation of fixed assets, and after solving potential endogeneity issues. The resulting increase in corporate profits drives an increase in tax revenue of 44.05 billion yuan, while the reform also results in a tax reduction of 17.525 billion yuan and a cost-benefit ratio at the fiscal level of 251.36%. Moreover, to improve the representativity of the sample, regression analysis was conducted using tax survey data, which yields a cost-benefit ratio of 165.07%. Using the ratio of total profit to total assets as the dependent variable to overcome potential errors in baseline regression, a cost-benefit ratio of 248.84% is obtained. The estimate from baseline regression is the average effect during the observation period, and considering the subsequent impact on revenue and costs, a cost-benefit ratio of 214.5% is obtained. Subsequently, the broader cost-benefit situation from the socio-economic development level is discussed, including the economic and social benefits brought by the increase in R&D investment brought by the reform, deadweight losses caused by horizontal and vertical inequality due to different tax treatments, and compliance costs caused by the policy, arguing the effectiveness of the policy in a broader sense. Based on these conclusions, at the fiscal level and in a broader sense alike, the R&D additional deduction policy is cost-effective, and the continuity and implementation strength of this policy should be ensured in the next step, enhancing economic innovation vitality while promoting the healthy development of the fiscal and tax system. In terms of tax expenditure system construction, efforts should be made to improve policy benefit assessment capabilities. It is essential to select key policies among numerous tax expenditure policies, design reasonable assessment models, conduct quantitative analysis of benefits, and precisely evaluate cost-effectiveness. The increasingly rich tax data and micro-econometric methods provide a foundation for this.The core goal of this paper is to analyze the impact of representative policies on fiscal revenue and expenditure from tax expenditures and to explore pathways for cost-benefit assessment of tax incentive policies. Such studies are still relatively rare. The marginal contribution of this paper lies in the fact that it is the first to specify the costs and benefits of tax expenditures in absolute numbers, obtaining the cost-benefit ratio of the policy and achieving cost-benefit assessment at the fiscal and tax level. This reflects three values. Firstly, it can measure the real impact of tax expenditure policies on fiscal revenue, helping to more intuitively understand the effectiveness of the policy, thereby promoting policy optimization. Secondly, achieving performance evaluation based on cost-benefit analysis is an important part of implementing budget performance management, and the exploration of this paper's policy cost-benefit assessment can provide clues for improving the theoretical framework of China's budget performance management. Thirdly, for a long time, benefit assessment has been a difficulty in tax expenditure practice, and this paper's attempt to quantitatively assess policy benefits has referential value for further promoting the institutionalization of tax expenditure systems. Meanwhile, this paper also has room for further expansion. On one hand, to avoid estimation bias in cost-benefit estimation, it is necessary to capture the behavioral responses of micro-entities to changes in tax policies in the calculation. On the other hand, to achieve a comprehensive estimation of the policy, there is a need to further precisely estimate the generalized benefits and costs.
刘柏惠. 企业所得税税式支出的成本效益分析——以研发费用加计扣除政策为例[J]. 金融研究, 2024, 525(3): 188-206.
LIU Baihui. Cost-Benefit Analysis of Tax Expenditures in Corporate Income Tax:The Case of Additional Deduction for R&D Expenses. Journal of Financial Research, 2024, 525(3): 188-206.
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