Innovation is the primary driving force for development and the strategic underpinning for building a modernized economy. However, innovation is a dynamic and complex system, and innovation activities have the characteristics of external economy, uncertainty and high risk, which often lead to market failure, and the support of government financial and tax policies is indispensable. Although financial and tax policies can indeed promote innovation input or innovation output of enterprises, under the current situation in China, both financial subsidies and tax incentives in China hinder the normal operation of innovation mechanism, thus leading to the loss of innovation efficiency.First of all, the objectives of enterprise behavior and government behavior are different, and government intervention will lead to the dislocation of innovation decision-making subjects.Secondly, financial and tax incentives increase the additional income of enterprises and distort the mechanism of enterprise innovation motivation.Third, the information asymmetry between the government and enterprises leads to the relaxation and weakening of the constraint mechanism of R&D activities due to financial and tax incentive policies.It can be seen that although financial and tax incentive policies have different degrees of positive incentive effects on innovation input and innovation output of enterprises, they distort the innovation transformation mechanism, and thus damage the innovation efficiency of enterprises as a whole.At present, China's economy has shifted from a stage of high-speed growth to a stage of high-quality development. The national financial and tax innovation incentive policies must focus on supply-side structural reform, promote innovation mechanism reform and give priority to innovation efficiency. Therefore, the following countermeasures and suggestions are put forward:First, the focus of national policy support for scientific and technological innovation should be focused on promoting innovation input orientation, and shift to promoting innovation transformation mechanism reform and improving innovation efficiency.Second, with innovation efficiency as the guide, we should rationally allocate financial innovation resources among enterprises of different ownership, different technical levels and different scales.Third, national financial and tax policies should gradually withdraw from competitive R&D activities, and the main goal should be to promote the external economy of innovation activities.
