Abstract: Based on China's provincial panel data from 2003 to 2015, this paper studies the impact of sharing tax on local financial efforts. Taking value-added tax sharing as an example, by constructing a dynamic panel data model, the empirical results show that value-added tax sharing plays a 'substitution effect’ on local financial efforts. With the increase of the amount of value-added tax shared to the local government, the tax collected by the local tax bureau decreases. Through the channel identification method of Acemoglu et al., it is found that since the tax collection and management adopts the 'task objective management’ mode, value-added tax sharing has a negative impact on local taxes by reducing the efforts and efficiency of local tax collection and management. Therefore, after the merger of national and local taxes, under the new tax collection and management system, we should strengthen the informatization and legalization of tax collection and management, and abandon the target management system of tax collection and management, so as to give play to the economic growth effect of the new tax collection and management system.

Key words: system of tax distribution, VAT sharing, fiscal effort, substitution effect