Based on Chinese provincial panel dales from 1999 t0 2013，this paper analyzes the impacts of industrial agglomeration on regional fax competition by means of spatial econometric models. The typical facts show that there is a significant positive correlation between industrial agglomeration and regional fax burden. The results of spatial econometric models and their robust tests indicate that industrial agglomeration positively has impact on regional tax burden when the level of economic development，the fiscal expenditure，the level of infrastructure，and the industrial structure are controlled. Regions with a high degree of industrial agglomeration bear a high tax burden and thus have an advantage in tax competition. Hence,the result implies that it is important for China to raise the level of industrial agglomeration to effectively increase regional tax revenue and improve public welfare.