A Research on Economic Factors Affecting China's Tax Growth Based on Panel Error Correction Model

This paper discusses how various kinds of major economic factors affect China's tax growth. We apply the panel unit root testing, panel co integration testing and panel-based error correction models to analyze the long-term stable relationship among tax growth, GDP growth, optimization of industrial structure and import for 30 provinces during 1994-2008 periods. The empirical results show that in the long run, the dependence of GDP growth on tax growth is lowest in east China, higher in central China, and highest in west China. Optimizing and upgrading industrial structure has greater effect on promoting tax growth in east China than in central and west China. Import is non-significant for promoting tax growth.