Abstract: This paper analyzes the growth effects of tax structure and productive expenditure in an endogenous growth model. Using panel data of 29 provincesfrom 1997 to 2006 inChina, the economic growth effect and regional differences of changes in the tax structure have been investigated.
Compared with previous researches, the main differences are taking government budget constraint into account in the empirical study and investigating tax structure changes both in the condition of increased revenue and unchanged revenue. The results indicate that the increases of income tax share and property tax share do not hinder economic growth, but the growth effect of tax structure changes may be quite different among regions: the rise of income tax share expands regional gap, while the rise of the property tax share narrows the gap between east and west. To promote balanced developmentof regional economy, the future direction of tax structure adjustment may focus on increasing property tax share without reducing the income tax share.
Keywords: Tax Structure, Economic Growth, Regional Economic Growth, Government Budget Constraint
source:Finance & Trade Economics ,No9,2013