Tax Policy Support and Enterprise Expectation Improvement
The weakening of expectations is an important issue facing the economy at present.If confidence in the economy declines and the expectations of market participants are insufficient,it will affect the general domestic cycle of production,consumption and investment and push the economy into a downward cycle.In the context of market uncer-tainty,after weakening its expectations,the enterprise will decrease investment and reduce market supply,which in turn will impact employment and income for residents,further contracting demand.So,the key to breaking the triple pressure is to solve the problem of weakening expectations,and the weakening of enterprise expectations for the future should be given high priority at this time.In this context,the Chinese government has implemented a series of proactive fiscal measures mainly focusing on tax and fee reduction,which aims at alleviating the cost burdens on enterprises.These measures help to resolve the pro-duction and operations difficulties and promote the stable development of market entities.After the intensive rollout of these beneficial measures,how effective are they in increasing confidence and stabilizing the expectations of enterprises?How should they be further improved in practice?Existing literature offers scarce examinations of the stabilizing effects of the current large-scale tax and fee reduction policies,both from a theoretical and empirical perspective.This paper constructs enterprise-level indicators of development expectations and tax incentives,studies the impact and mechanism of a package of tax policies on boosting enterprise confidence,and then proposes targeted measures to en-hance enterprise expectations.Our findings are as follows:(1)Preferential tax policies enhance enterprise cash flows,which in turn boosts enterprises'confidence,helps to raise their expected investment,and expands capacity demand;(2)Un-expected tax incentives will further enhance enterprises'sense of gain,strengthen their market confidence,and transform positive expectations into actual employment expansion,which indicates the significant positive effects of China's tax policies;and(3)However,frequent policy adjustments may also increase the risk perception of enterprises and inhibit the positive effect of tax policies on the expectations of enterprises.Heterogeneity analysis indicates that tax breaks signifi-cantly boost confidence in manufacturing and private enterprises.In terms of implementation,tax refunds are more effec-tive in boosting confidence than tax cuts and exemptions.Overall,the current priority is to prioritize stabilizing enterprise expectations and safeguarding market entities to pro-tect employment and people's welfare.Additionally,efforts should be made to mitigate the impact of unexpected shocks,enhance the implementation of policies aimed at assisting enterprises in overcoming their difficulties,and ensure that the main beneficiaries of the tax reduction policy can fully benefit from the policy dividends.Consistent tax reduction can demonstrate a resolute commitment to stabilize economic growth,stimulate the development needs of enterprises,and in-spire the enthusiasm of private capital investment,so as to stabilize market confidence and the expectations of enterprise development.This paper makes three contributions.Firstly,previous studies focus on the formation of individual's macro expecta-tions,and pay less attention to the formation process of the enterprise's development expectations,especially the enhance-ment of enterprise confidence.Secondly,unlike the existing literature that uses macro price or text data to reflect market expectations,this paper provides a direct measure of enterprise confidence,which can reflect the expectation bias and dy-namic change of micro enterprises.Thirdly,while the existing literature analyzes the mechanism of tax policies on enter-prises from a theoretical perspective,this paper further examines the impact of tax breaks on enterprise expectations and real factor inputs,enabling a distinction between the signaling shock prior to policy implementation and the actual effects thereafter.It also contributes to a more comprehensive understanding of the actual effect of the tax reduction policy.
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