Search

Tax incentives are an important driving force for enterprises to ease financing constraints and promote innovation. Current studies focus on the tax-reduction effect of corporate tax incentive policies, paying less attention to the tax uncertainty engendered by tax reform. This study explores whether the predictability of corporate tax burdens is a key restrictive factor in corporate innovation. It focuses on the impact of tax uncertainty arising from the tax reform process on enterprise innovation, proposing a multidimensional measurement method to identify corporate tax uncertainty. The results show that tax uncertainty significantly inhibits corporate innovation and that its influence channels operate mainly through corporate financing constraints and information transparency. Further heterogeneity analysis reveals that a better regional economic system environment, greater tax enforcement effort, and digital transformation can restrain the negative impact of tax uncertainty on enterprise innovation. These findings enrich the literature on the factors influencing corporate innovation behavior and extend the research on tax reform, providing an innovative perspective for interpreting enterprises' tax burden. Furthermore, it offers practical implications for tax reduction reforms and guidelines for enterprise innovation. [ABSTRACT FROM AUTHOR]

As the most direct way to guide and support the transformation and upgrading of grain enterprises, government subsidies have an important orientation for the transformation and development of Chinese grain enterprises and the improvement of new quality productivity. Based on the data of 136 grain listed companies and NEEQ listed companies from 2015 to 2022, this paper empirically tests the impact of government subsidies on the new productivity of grain enterprises and its transmission mechanism. The research results show that government subsidies have significantly improved the new productivity of grain enterprises. The analysis of the mechanism of action finds that government subsidies have promoted the improvement of new productivity of enterprises by optimizing the structure of human capital and improving the absorptive capacity of enterprises. Further research shows that the higher the degree of product market competition, the lower the tax burden of enterprises, and the government subsidy exceeds the threshold value of 8.9685, the greater the effect of government subsidy on the improvement of new quality productivity of enterprises. The economic consequence test shows that government subsidies can promote the new productivity of grain enterprises and effectively improve the total factor productivity of enterprises. The research in this paper provides relevant enlightenment for the Chinese government to strengthen project planning, strengthen resource coordination, and implement scientific and accurate policies in the new round of fiscal and taxation system reform. [ABSTRACT FROM AUTHOR]

This article investigates the occurrence and outcomes of corporate tax-related political activity through bribery. Specifically, it examines the extent to which firms bribe government officials through gift-giving, banqueting, and entertaining activities and the extent of payoffs that firms gain from these bribery practices. Using a large hand-collected dataset of Chinese listed firms for the period from 2009 to 2014, I find that firms that spend more on consumption bribery exhibit a significantly lower tax burden. This negative association is mainly driven by small firms, non-state-owned firms, state-owned firms with weak political connections, and firms in competitive industries. Further evidence shows that the tax benefits from bribery are more apparent in more corrupt, less economically developed, and less liberalized regions. Furthermore, the payoffs of tax bribery are mitigated by 45.4% after the implementation of China's anti-corruption campaign in 2012. These findings have policy implications for governments to optimize investment environments and increase tax revenue by curbing power-for-money deals. [ABSTRACT FROM AUTHOR]

AbstractThis paper investigates the impact of China’s value-added tax (VAT) expansion reform on specialization using data sourced from listed companies. Through an examination of changes in business scope and revenue, two significant findings emerge. First, certain companies extend their services beyond internal use, aiming to boost sales during the post-reform period. This expansion is evident in the changes observed in the business scope matrix. Second, certain service providers experience a significant revenue increase as they attract outsourced orders from manufacturers affected by the reform. The disaggregated analysis of the three sectors involved in the VAT expansion reform further substantiates these findings. Moreover, we rule out tax avoidance as a motive by evaluating actual changes in tax burden, as opposed to projected burdens. These findings have important policy implications for understanding the ramifications of VAT reform and the dynamics of specialization within the industry. [ABSTRACT FROM AUTHOR]

This paper investigates the effect of China's accelerated depreciation policy on within-firm pay gap. We exploit a firm-level panel data from China's A-share listed companies and estimate the policy effects by constructing a difference-in-differences model. Results show that the accelerated depreciation policy significantly increases the within-firm pay gap of firms of pilot industries than those of non-pilot industries, and this finding continues to hold after accounting for other contemporaneous shocks and is robust to a battery of robustness checks. Our mechanism tests demonstrate that, the rank-and-file employees replaced by the use of capital rather than executives, dominates the positive nexus between within-firm pay gap and accelerated depreciation policy. This effect is more pronounced for firms with higher tax burden, stronger financing constraint and higher capital intensity. We also find that China's accelerated depreciation policy improves overall capital allocation efficiency and labor allocation efficiency. Our findings provide a deep understanding of the link between tax incentives and within-firm pay gap, especially from the perspective of factor allocation. [ABSTRACT FROM AUTHOR]

The transition to a green, sustainable economy is largely reliant on corporate investment in the realm of environmental protection. Utilizing the adoption of the third phase of the Golden Tax Project (GTPIII) in China as a quasi-natural experiment, this paper examines how corporate environmental investment changes in response to greater tax enforcement. Our results reveal that tougher tax enforcement significantly lowers corporate environmental investment. Such an effect is stronger for firms faced by high financial constraints and those operating in non-heavy-polluting industries. Moreover, the mechanism analysis indicates that the higher tax burden induced by greater tax enforcement is the potential channel. Overall, this paper shows that stricter tax enforcement could potentially result in adverse spillover effects on corporate environmental investment, which warrants attention in tax collection practices. [ABSTRACT FROM AUTHOR]

Public finance lies at the heart of politics. It shapes citizens' political attitudes and behaviors. While the expenditure side has been studied very extensively, the income side has been neglected, especially in authoritarian regimes. Taking China as an ideal case, we use a nation‐wide random sample of urban residents to study how citizens under strong authoritarian states perceive their tax burdens. We find that Chinese citizens have low tax consciousness, defined as the perception of fairness both in comparison to people they know and to the amount of public goods they receive. Citizens' income, the amount of public goods they receive, and media consumption have important effects on their tax perception. We argue that there are three mechanisms used by China's "half‐tax state" to reduce their citizens' tax perception: (1) reduce the salience of people's tax burden, conditional on their income level, (2) generate fiscal illusion effects while providing public services in return for taxes paid, and (3) use propaganda to shape the ideology of tax compliance. [ABSTRACT FROM AUTHOR]

In this study, we examine the relationship between value-added tax burden and export quality. Our results show that the increase of VAT burden leads to lower export quality. We also find that the decline in export quality may be caused by the decrease of product innovation. Moreover, the empirical evidence on patent application shows that VAT burden mainly reduces invention and utility model patents, instead of design patents. [ABSTRACT FROM AUTHOR]

Estimating effective VAT rates (EVATR) of industries to assess their tax burden and efficiency has drawn much interest in policy research; but the challenge is the lack of industrial Output VAT data. We develop a novel method to recover all VAT statistics at the industry level and endogenously solve EVATR from publicly available data by utilizing input-output relationship in a Computable General Equilibrium (CGE) structure. We apply the method to China's data, estimate EVATR, and analyze implied tax efficiency and the tax burden of individual industries. Our study identifies true reasons for "VAT over-taxation" in some Chinese industries: China's multiple-tier VAT rate system with unrefunded Input VAT and the accounting inconsistency between taxation and national accounts. [ABSTRACT FROM AUTHOR]

This study examines the influence of the reduction in value-added tax (VAT) rates in China during 2018 and 2019 on corporate financialization. By employing a difference-in-differences model and utilizing data from Chinese A-share listed companies between 2017 and 2020, we assess the effects of tax reduction policies. Moreover, it achieves this outcome through three main pathways: alleviating financing constraints, boosting fixed asset investment, and weakening corporate financial arbitrage motives. Further analysis demonstrates that the inhibitory effect of VAT rate reduction on corporate financialization is more pronounced for non-manufacturing companies, businesses reliant on the basic tax rate as their primary revenue source, companies with low intermediate input rates, and those with a strong ability to shift the tax burden. Additionally, debt financing costs play a crucial role in moderating the relationship between tax reduction policies and corporate financialization. The conclusions drawn from this study provide valuable empirical evidence that can contribute to the refinement of VAT reduction policies and the prevention and resolution of financialization at the micro-level. [ABSTRACT FROM AUTHOR]

It is of great practical significance to analyze the differences of actual tax burden value-added tax (VAT) from the perspective of industrial linkage for accelerating the construction of a modern industrial system and promoting the formation of a new development pattern. This paper explains the differences and causes of the actual VAT tax burden in the manufacturing industry from the perspective of industrial linkage. According to the research results, the closer the intermediate input connection between an industry and other industries, the lower the actual VAT tax burden it bears. The characteristics of production network have a moderating effect on the relationship between the linkage of the manufacturing industries and the actual VAT tax burden. For the industries in the center of the production network, a stable backward linkage weakens the influence of industrial linkage on their actual tax burden. It is difficult for industries located in the spillover block to reduce their tax burden by adjusting the linkage of intermediate goods. In addition, highly linked manufacturing enterprises can also reduce their actual VAT tax burden by tax avoidance, tax shifting, adjusting the types of intermediate inputs and so on. Smoothing the domestic production network of the manufacturing industry and optimizing the VAT burden bearing mechanism of each manufacturing sub-industry will help promote the stable growth of the manufacturing industry and healthy development of the macro economy in China. [ABSTRACT FROM AUTHOR]

This study examines how an important reform of local governance—village democracy—in the world's most populous areas has affected the happiness of residents in rural China. We find that introducing elections per se has no significant impact. In comparison, direct nomination of local leaders by villagers, which is a form of competitive election involving a high degree of public participation in political decision making, leads to higher levels of happiness. Further mechanism analyses show that direct nomination improves the local accountability of elected leaders by boosting the quality and effort of village heads and their governance performance by lowering the tax burden of villagers and vitalizing local public services. Our results highlight the importance of public participation in democracy and the underlying role of local accountability in affecting the subjective well‐beings of citizens. [ABSTRACT FROM AUTHOR]

Developing the marine economy, protecting the marine ecological environment, and speeding up the construction of marine power are important components of the Chinese path to modernization. To promote marine ecological preservation and high-quality development of the marine economy in a coordinated manner, China has carried out the construction of marine ecological civilization demonstration zones, aiming to deepen marine ecological governance and solve difficulties in marine development. Based on the panel data of 47 coastal cities from 2006 to 2019, this study regarded the construction of China' s national marine ecological civilization zones as a quasi-natural experiment, using the difference-in-differences method to explore the impact mechanism of this pilot policy on the coastal zone environment. The results showed that: ① The marine ecological civilization demonstration zones significantly improved the coastal zone environment and effectively promoted the pollution control of the coastal environment and nearshore water quality environment. ② Heterogeneity analysis showed that regional marketization level and local government promotion mechanisms had different moderating effects on the construction of marine ecological civilization demonstration zones. ③ The construction of the marine ecological civilization demonstration zones affected the coastal zone environment by increasing the intensity of the government' s governance and the tax burden on enterprises. Increasing the intensity of government governance could effectively reduce coastal wastewater and waste gas emissions but could not highlight its 'greening' effect on the nearshore water quality environment. Increasing the tax burden on enterprises was conducive to giving full play to the impact of market-oriented and paid management mechanisms on the coastal zone environment. This study focuses on the analysis of coastal zone environmental effects from the perspective of land and sea, which enriches the research on the impact of demonstration zone construction on the coastal zone environment. In the process of comprehensive regulation, we should uphold the concept of overall coordination between land and sea. While giving full play to the role of political guidance, we should effectively enhance the efficiency of economic governance and steadily promote the continuous improvement of the environmental quality of coastal zones. [ABSTRACT FROM AUTHOR]

We investigate the effect of property taxes on households' rental income by exploiting regional variations in the introduction of property taxes in China in 2011. Using the propensity score matching combined with a difference‐in‐differences approach, we find that the rental income of households in pilot areas significantly increased after 2011. Hence, homeowners tend to shift the potential property tax burden to tenants. Additionally, this positive effect is driven by the extensive margin, rather than the intensive margin. Our finding is robust to various alternative specifications and subsample analysis. We then adopt a triple‐difference model to show that the effect varies considerably across households that own residential premises in different regions and with different property characteristics. [ABSTRACT FROM AUTHOR]

This study aims to analyse whether there is a cost stickiness phenomenon in which Chinese companies recognize costs early in the years immediately preceding the tax rate cut (hereinafter TRC) in order to minimize tax burden, and to investigate whether high-tech companies with large TRCs have a higher level than general companies. The analysis results can be summarized as follows: First, there is a phenomenon of cost stickiness in Chinese companies in the year immediately before the TRC. Second, before the 2008 TRC in China, the level of cost stickiness of high-tech companies was not statistically higher than that of general companies. The results of this study provide the following implications that Chinese companies use cost as an incentive to minimize their tax burden. Companies can use appropriate surplus resources as a buffer against environmental changes and actively utilize inefficient resource allocation to promote innovative R&D and improve corporate performance. [ABSTRACT FROM AUTHOR]

Tax collection and management is an important factor affecting corporate pollution emissions, but currently, few studies systematically and rigorously identify its effects. Based on China's tax collection and management reform and a microenterprise database, this paper uses a regression discontinuity design model to empirically analyze the impact of tax collection and management reform on environmental pollution and the mechanism of this impact. This study found that the tax collection and management reforms have significantly increased environmental pollution. On average, the environmental pollution of enterprises affected by the reform has increased by approximately 10.8%. This effect is more pronounced in companies with high innovation capabilities and financing constraints, companies in underdeveloped areas, zombie companies, large-scale companies, and non-labor-intensive companies. The impact mechanism analysis shows that tax collection and management reforms increase the tax burden and costs of enterprises and reduce enterprise operating performance, thereby exacerbating environmental pollution. The findings of this article help clarify the impact of government taxation decisions on environmental pollution decisions and have enlightening significance for improving taxation system design and reducing environmental pollution in developing countries. [ABSTRACT FROM AUTHOR]

This paper aims to evaluate and compare the distributive impact of the personal income tax (PIT) on individual's income in Brazil and China by measuring the Gini Index before and after this tax incidence. The paper also proposes a methodology for transposing the PIT backets from one country to another. The results show that a more progressive scheme implemented by China, with more brackets and higher rates, does not guarantee reduction of inequality, due to the level of income exemption and to the incomes on which the marginal rates affect. Thus, it can be perceived that the PIT brackets of these two countries deserves revisions if they seek to fulfill the distributive function. [ABSTRACT FROM AUTHOR]

The implementation of China's mandatory corporate social responsibility (CSR) disclosure in 2008 provides us with a natural experiment setting. In this paper, we examine the effects of mandatory CSR disclosure on the levels of firms' tax avoidance and tax incidence. By using a difference-in-differences model, we predict and find that mandatory CSR reporting firms tend to be less tax aggressive. Then we test who bears the burden of the effective tax rate increase. It shows that the increase of effective tax rate causes a drop in firm output and imposes a tax burden on the firms' consumers. The reduction in output also reduces demand for the firms' inputs and after-tax returns, passing tax burden to suppliers, other stakeholders, employees, and shareholders. In contrast, there is no evidence that the decrease of firms' tax avoidance activities influences the tax incidence of governments, banks, and other creditors. These findings provide evidence that mandatory CSR disclosure changes firm tax planning activities and indeed influences the costs of various stakeholders. [ABSTRACT FROM AUTHOR]

Corporate VAT planning, though difficult to observe, has become more prominent. By considering the Chinese VAT transition as an external policy shock, this article adopts a difference-in-difference model to study this issue for the period 2006–2009. The results indicate that companies, in particular companies with high financing constraints and low type I agency costs, had investment-shifting behavior, so as to reduce the tax burden. Compared with agency costs, financing constraints have a greater influence on firms' shifting. Further, the market has a positive attitude toward shifting of high financing constraints companies, but a negative attitude toward that of high agency costs companies. [ABSTRACT FROM AUTHOR]

The rapid rise of C2C e-commerce in China has brought serious difficulties to China's tax collection and management. Based on the principle of progressive taxation, the necessity of taxation on C2C e-commerce is analyzed and discussed. It is shown that the absence of taxation in C2C e-commerce is contrary to the principle of tax equity and tax neutrality, and the tax revenue is lost. It is demonstrated that it is imperative that China to implement C2C e-commerce taxation in a comprehensive and standardized way. By constructing a hybrid decision game model between C2C business operators and tax authorities, the static game analysis of incomplete information is conducted for the balance of interests between tax authorities and e-commerce operators. [ABSTRACT FROM AUTHOR]

With the increasing severity of environmental regulations, Chinese enterprises are gradually transforming from the profit growth pattern of "growth with pollution" to green development. However, this paper finds that this transformation is not complete. While catering to the national environmental protection governance requirements, some enterprises still persist the profit growth pattern of "growth with pollution." How to solve this problem? By attracting government subsidies, reducing tax burdens, and increasing the proportion of technical personnel employed, we theoretically and empirically demonstrate that the positive effect of "new infrastructure" in accelerating enterprises' transformation away from the profit growth pattern of "growth with pollution" to sustainable development. In the heterogeneity analysis section, we found that in enterprises with higher political correlation, more technical personnel, and lower labor cost, the "new infrastructure" has a stronger restraining effect on the "growth with pollution" pattern. [ABSTRACT FROM AUTHOR]

Join ITR and KPMG China at 10am BST (5pm Beijing time) on April 18 2024 for an analysis of the tax treatment of indirect share transfers in China, and insights into potential developments [ABSTRACT FROM AUTHOR]

Tobacco is a significant product providing considerable economic benefits to countries worldwide, while its increased consumption causes health and socio-economic losses for smokers and non-smokers. This paper constructs a decomposition system of tobacco taxation: the population aging factor is included in the influencing factors of personal tax, and personal tax revenue is regarded as the product of tax structure, macro tax burden, regional economy, reciprocal aging, and the elderly population. This article conducts an empirical study on the relationship between taxation and economic growth. The estimated coefficients of business tax and corporate income tax are significant at the significance level of 0.1, with a consumption tax and time-variable coefficients reporting a 0.02 level of significance. The T statistic value and the explanatory degree of the variables involved in the model to the explained variables are also very high, reaching more than 95%. We find that increasing the macro tax burden negatively impacts economic growth. Therefore, the study suggests that for fostering the industry's economic growth, the country needs to ensure the optimal macro tax burden of 17.5%, with different types of taxes influencing economic growth. Personal tax reform should pay attention to the phenomenon of aging, adjust the tax structure to increase personal tax income, provide policy support and guarantee for the elderly labor force, and encourage the re-employment of silver-haired people to alleviate the adverse impact of aging on taxation. [ABSTRACT FROM AUTHOR]

With the acceleration of population aging in China, the number of pure beneficiaries in the economy is higher than that of pure contributors, which seriously affects fiscal sustainability. This paper probes into the influence path and mechanism of population aging to fiscal sustainability in China, and numerically simulates the extent of such influence using a generational accounting method. Aging reduces the tax base and enlarges fiscal expenditure by reducing the quantity of labor and labor productivity, changing the resident's consumption level and structure, cutting down the saving rate, and widening the gap between social security revenue and expenditure, all of which challenge the balance of the fiscal system. The empirical results show that the problem of inequality in terms of the fiscal burden across generations is extremely prominent and the per capita tax burden under different birth rate assumptions is obviously different. Under the pressure of aging, in order to maintain the fiscal balance, the future per capita tax burden will be increased by a maximum of 55.9%. Although increasing productivity and reducing interest rates can help reduce that gap, their roles are far less important than the role of fertility. In order to cope with aging, the fiscal system should see an increase in income, a reduction in expenditure, and a redeployment of structure. That is, while at the same time perfecting the tax system and widening the tax base, the expenditure structure should also be optimized. [ABSTRACT FROM AUTHOR]

The existence of tax burden outlier of industries will hinder the sustainable development of the regional economy. By calculating the tax burden of 3,585 enterprises in 11 industries in China (Zhejiang) Pilot Free Trade Zone, we find that there are six industries with abnormal tax burden, namely, the construction industry, transportation, the warehousing and postal industry, information transmission, software and the information technology service industry, the financial industry, the real estate industry, and the leasing and business service industry. Based on the semi-parametric time-varying model, we changed the time variable into the industry variable, and studied the mutual influence of the tax burden of each industry under the control variables of actual tax burden and employment number respectively and jointly driven. Considering the control variable as the formulation of tax policy, we can calculate the interaction and fluctuation range of each industry tax burden under different tax policies. According to this result, the tax burden risk of six industries with tax burden outlier is allocated. [ABSTRACT FROM AUTHOR]

The fiscal imbalance between the central and local governments under fiscal centralization may motivate local governments to pass tax burdens on firms. The causal identification of the tax system reform and the sustainable export innovation behavior of firms are of great significance. This study uses the income tax sharing policy of China to examine the impact of fiscal centralization on the sustainable export innovation behavior of firms. We find that this tax reform has significantly inhibited the increase of the export value-added rate of firms, and has an increasing trend with the share ratio between the Central Government and the local government. Moreover, this effect mainly comes from the crowding-out effect of imported intermediate goods on domestic intermediate goods. The tests show that the above conclusions are consistent with the general logic of local governments. When they face greater downward fiscal pressure, they will further pass the tax burden on local firms and force the firms to promote their export performance to expand the tax base. This short-sighted behavior of replacing "quality improvement" with "quantity increase" is an important factor that affects the sustainable export innovation behavior of firms and the climb in the global value chain. [ABSTRACT FROM AUTHOR]

Will such an audit system outside the taxation bureaucracy undermine or reinforce the effect of the under-institutionalized tax administration system in seeking cooperation from private businesses? Similarly, Zhang argues that the under-institutionalized tax administration system is critical in reducing the tax burden for private businesses, as the local tax bureau has discretion in tax collection. [Extracted from the article]

Individual attributes have been demonstrated to influence the entrepreneurial decisions of returnees, but little is known about the regional factors. This study employed a dual-level logistic model to explore the effects of both individual characteristics and regional context on returnee entrepreneurship in China. The results indicated the significance of both individual-level attributes and regional context in the entrepreneurial entry: regional prosperity, government fiscal expenditure, tax burden, rainfall, and transportation infrastructure significantly affected the entrepreneurial probability. This study extends the returnee entrepreneurship literature by first, elucidating the importance of regional context in entrepreneurship and second, highlighting the joint impact of economic, institutional, and geographical contexts. [ABSTRACT FROM AUTHOR]

Using data from China Annual Survey of Industrial Firms and addressing potential endogeneity problem, we find that corporate tax burden in China is procyclical during recessions and countercyclical during booms. The cyclicality is stronger for enterprises whose corporate income taxes are levied by Local Tax Bureau (LTB). Procyclicality of corporate tax burden during recessions is larger for enterprises located in county, non‐state‐owned enterprises (non‐SOEs), non‐high‐tech enterprises and large‐medium enterprises. Furthermore, tax quotas and growth targets of local governments enhance procyclicality during recessions and the countercyclicality of corporate tax burden during booms. Tax collection and government spending are important channels through which tax quotas and growth targets affect the cyclicality of corporate tax burden, respectively. This paper provides important policy implications for China during economic recessions. [ABSTRACT FROM AUTHOR]

We examine whether the Chinese government's anti‐corruption enforcement reduces corporate tax burdens. Using a difference‐in‐difference approach, we find tax burdens of firms located in corrupt political leaders' jurisdictions are lower after these leaders were deposed. An analysis of two tax policy changes shows that the reduction in tax burden is more pronounced when corrupt politicians had more power in levying taxes. [ABSTRACT FROM AUTHOR]

This paper provides empirical evidence on how intergovernmental revenue relations would affect governments' incentives on tax enforcement in a developing country. By taking advantage of the exogenous shock induced by China's corporate tax income revenue sharing reform in 2002, I find that the local governments would increase tax enforcement on local business tax and surcharges (BTS) to offset the adverse fiscal shock. In addition, such tougher tax enforcement was heterogeneous across firms. The increased effective BTS was mostly driven by non-state-owned enterprises and domestic firms. This paper further shows that the incidence of corporate tax could be passed onto workers through lower wages and benefits. On average, the share of corporate tax burden borne by workers in China is approximately 62%, which is higher than the estimate in Germany (Fuest et al. in Am Econ Rev 108(2):393–418, 2018). [ABSTRACT FROM AUTHOR]

This paper distinguishes between different forms of government intervention upon a firm, including the firm's tax burden, sales to the government and state shares. We investigate how these types of government intervention affect micro‐financial development. With evidence from China, we confirm that the micro‐financial development is promoted by the firm's tax burden and sales to the government but constrained by the firm's state shares. The findings remain robust to the endogeneity issue. The findings offer applications for government policies or a firm's financing strategies. [ABSTRACT FROM AUTHOR]

We have identified two general lessons, suggested from the 2019 personal income tax reform of China, regarding third-party reporting, tax compliance, and tax incidence. First, third-party reporting is an effective mechanism to enforce tax compliance. Second, tax evasion can affect tax incidence. We argue that these two general lessons are important for both academic researchers and policymakers. [ABSTRACT FROM AUTHOR]

The responsibility for carbon emissions tends to be different under different emission accounting principles. By applying the latest 2012 Chinese multi-regional input–output table, this study evaluated the impacts of carbon tax on tax burdens and sectoral competitiveness in Chinese provinces when considering either production-based or consumption-based emissions. Our results indicated that, in the scenario of cutting production tax for carbon tax, the developed provinces, such as Beijing, Shanghai, Zhejiang, and Jiangsu, who are much bigger payers of production tax, are net beneficiaries of carbon tax. In contrast, recycling the tax revenues to low-income households makes the less-developed provinces in the central and western China become net revenue receivers. Furthermore, for competitiveness effects, the emission intensive sectors, such as Electricity and hot water production and supply, Petroleum and gas, and Metal products, are impacted vitally under both accounting principles in all provinces. Nevertheless, compared with the production-based principle, a consumption-based carbon tax could reduce the unfavorable competitiveness effects of most affected sectors in the less-developed provinces, while slightly increasing those effects in the developed provinces. Our results provide new information on the regional impacts of carbon tax based two different accounting principles with different tax revenue recycling scenarios. [ABSTRACT FROM AUTHOR]

Copyright of Research of Environmental Sciences is the property of Research of Environmental Sciences Editorial Board and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Firms' behaviors are not only affected by their taxation burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms' heterogeneity of tax burden and firms' characteristics, such as size, ownership, exportation and location. We measure a firm's tax burden in three ways, the value-added tax (VAT) burden, the corporate income tax (CIT) burden, and the total tax burden. By using a Hausman–Taylor estimation, we find: (1) The CIT burden is positively correlated to the size, while other two tax burdens are not; (2) Both the VAT burden and the total tax burden of SOEs are significantly heavier than those of non-SOEs, while the CIT burden shows the exactly opposite effect; (3) Exporters have a remarkably lower tax burden than non-exporters for all three tax burden measures; and (4) The western region and particularly the central region have lighter tax burden than the eastern region for all three tax burden measures. We also provide empirical evidence and policy suggestions for continuing to proceed with the structural tax reduction and the structural fiscal reform in China. [ABSTRACT FROM AUTHOR]

Fierce competition among county-level governments has substantially increased disparities in public service provision and housing markets across urban China. The role of the changing intracity administrative structure deserves scholarly, attention in this process. Building on an interdisciplinary literature of public choice and cadre promotion theory, we propose that interjurisdictional competition enlarges the intracity fiscal disparity under China's transitional administrative and fiscal systems. Results from fixed-effect panel data modeling confirm that cities with higher level of interjurisdictional competition are associated with higher intracity fiscal disparity. This study demonstrates how transition and decentralization of the centralized fiscal system have long-term, intended and unintended, impacts on fiscal inequality and urban stratification. With continuous urban sprawl, jurisdictional annexation, and large-scale urban-to-rural migration, our study suggests that policies attempting to equalize public service distribution within cities need to consider the administrative structure at the local and regional levels. [ABSTRACT FROM AUTHOR]

Since Chinese government put a target to decrease carbon intensity 40–45% in 2020 than that of 2005, a series of emission mitigation measures has been implemented. Against this backdrop, we established a system dynamics model to investigate the energy consumption, CO 2 emission and mitigation options in China. The results show that the carbon intensity will reduce by 22.68%, 26.84%, 43.77%, and 46.65% in BaU (Business as usual), NEP (New energy policy), CTP (Carbon tax policy) and IP (Integrated policy) scenarios in 2020 compared with 2005. Obviously, Chinese government can accomplish the target under CTP and IP scenarios. Moreover, the “inflection point” in CTP and IP scenarios reveals the decision-making process between tax burden and emission reduction behavior. A brief analysis of interactive effect is accomplished by equilibrium theory and simulation results. It shows that the interactive effect of two policies, which act on the same object with same action direction, is weaker than the aggregation of two separated effects, whereas it is larger than any individual effect. In a nutshell, these findings are helpful for policymakers to optimize their policy decision-making to cut CO 2 emissions. [ABSTRACT FROM AUTHOR]

Environmental taxation is regarded as an effective tool to improve air quality in China, but its distributional effects causing serious disparity among multi-groups and multi-regions are understudied. Here this paper constructs a multi-regional dynamic recursive computable general equilibrium (CGE) model to explore the distributional effects of China's environmental taxation among different income groups and regions, by specifying the elasticity parameters of urban households' consumption in the model, and combining with various micro-data such as household survey data and environmental statistics database. This paper simulates the air pollution reductions of China's environmental taxation, and the impacts on the income and expenditure of households with various environmental tax rates or manners of tax revenue recycling. Results have shown that China's environmental taxation will widen the gap between different income groups and different regions. Also, such adverse distributional effects will be increased by higher environmental tax rates. However, recycling environmental tax revenues to both households and enterprises can reduce the losses of households' income and consumption. Yet recycling revenues to enterprises is more effective in narrowing the gap between income groups and regions while improving regional economic development. Our findings may pave a way to design appropriate environmental tax rates and tax revenue recycling manners for China's future environmental tax policies at the regional level. [Display omitted] • A multi-regional CGE model is constructed to explore the distributional effects. • Various environmental tax rates and tax revenue recycling manners are considered. • Low-income households and underdeveloped regions will bear more tax burden. • Recycling revenues to enterprises is more effective in reducing wealth disparity. [ABSTRACT FROM AUTHOR]

How do differences in the motive for conspicuous consumption in the United States and China affect the incidence of taxes in those countries? In this paper I develop a model of conspicuous consumption in which a consumer cares not only about the direct utility she receives from consumption, but also about the way her consumption pattern affects her peer group's belief about her well-being. Estimating the model on American and Chinese data, I find that a Chinese consumer cares 20% more than an American consumer about peer beliefs. I use the estimated model in several experiments related to tax incidence. I find that the 1990–2002 American luxury tax on automobiles led to widespread but small welfare gains, and that the stronger Chinese motive for conspicuous consumption leads to fewer households harmed and larger median welfare gains from a 10% tobacco excise tax. [ABSTRACT FROM AUTHOR]

The goals of carbon peak and carbon neutrality pose new challenges to China's economic growth and carbon reduction efforts. Regarding synergy of policies, a dynamic general equilibrium model is constructed to analyze the feasibility of achieving carbon peak. We find that, compared to other greenhouse gas (GHG) mitigation regulations, carbon taxes are more effective in curbing pollution emissions; hence, it is critical to implement carbon taxes in China. However, complete reliance on carbon taxes means formulating a tax rate that is four times higher than the constraints of the 2019 GHG mitigation regulations, which translates to a tax burden of 0.28%. Although current market-guided policies based on a service-oriented green finance approach can partially supplement the policy effects of carbon taxes, a guidance-oriented green finance approach is more effective because of its dual functions of guiding green investments and serving green industries. Such an approach leads to a comparatively lower carbon tax rate that is roughly two times higher than the constraints of the 2019 GHG mitigation regulations and a tax burden of 0.2%. We further show that in transitioning to carbon neutrality, a guidance-oriented green finance approach can generate optimal allocation effects of capital and environmental resources, thus promoting carbon reduction and green transformation. This study provides theoretical and quantitative reference for implementing carbon taxes and transforming green finance in China. [Display omitted] [ABSTRACT FROM AUTHOR]

Summary We provide firm level empirical evidence that the presence of foreign direct investment (FDI) has positively affected the institutional quality of the host regions in China. Specifically, Chinese domestic firms located in regions with a higher level of FDI tend to enjoy a lower level of tax and fee burdens, less arbitrariness in such burdens, as well as better legal protection. To address the potential issue of endogeneity, we adopt the instrumental variable approach. In addition, we explore the specific mechanisms through which the institutional impact is materialized and provide various extensions of the empirical findings that offer further support for the FDI-induced institutional improvement argument. [ABSTRACT FROM AUTHOR]

An institutional environment of fair competition helps to enhance the economic performance of enterprises, while its potential environmental effects are often ignored. In 2008, China implemented a unified corporate income tax merger policy that set the same tax rate for domestic and foreign-invested enterprises to make the domestic enterprises competitive with foreign-invested enterprises in a fair tax environment. Taking this policy as a quasi-natural experiment, we conduct a difference-in-differences estimation to identify the impact of a fair competition environment on firm-level SO 2 emission intensity. The results show that the fair competition environment significantly reduces the SO 2 emission intensity of domestic enterprises in China. This finding also remains robust after considering factors such as various settings, metrics, and potential impacts. The possible mechanisms through which this policy shock affects firms' SO 2 emission intensity are manifested by reducing corporate tax burdens, alleviating corporate financing constraints, promoting industry competition, elevating the production capacity of enterprises, and reducing the amount of pollutants generated. We also find firm-level SO 2 emission intensity responses to fair competition vary with firm ownership, location, and industry pollution intensity. Hence, improving conditions of fairness in the market can bring about a win-win result for both the economy and the environment. [ABSTRACT FROM AUTHOR]

Many studies have verified that zombie firms have serious negative effects in the economic field, but it is unclear whether those effects will extend to the environmental field. Based on China's firm-level data, this paper investigated the impact and mechanisms of zombies on wastewater discharge behavior by normal firms. The empirical study showed that the higher the proportion of zombies in a province is, the greater is the wastewater discharge by normal firms, which proves that zombies also have serious negative effects in the environmental field. The first mechanism is tax burden, which means that an increase in the proportion of zombies will induce the local governments to raise the actual tax rate on normal firms, which will worsen their financial situation and prompt them to increase wastewater discharge. The second one is institution quality, which means that the higher the proportion of zombies in a province is, the worse is the institution quality. In a low-level institutional environment, it is difficult to form effective governance on pollution. The last one is regulation power, which means that the higher the proportion of zombies is, the stronger is the incentive for local government officials to pursue GDP by relaxing environmental regulations. The contribution of this study is an extension of the research on zombies to the environmental field, which is significant to the in-depth understanding of the widespread, global problem of zombies. This study provides an important idea for countries committed to environmental protection. In addition to direct channels such as environmental regulation, indirect channels such as reducing unreasonable government intervention, speeding up the clearance of inferior firms, and creating a healthy market environment are also of enormous importance. • This paper pushes forward the researches on the negative effects of zombie firms to the environmental field. • The higher the proportion of zombies in a province is, the greater is the wastewater discharge by normal firms. • Tax burden, institution quality and regulation power are important mechanisms. • For government, less intervention may also play a significant role to enhance the environmental performance. [ABSTRACT FROM AUTHOR]

The article offers information about tax laws and regulations in China. Topics being presented include a meeting between the country's National People's Congress, China's new Parliament, and the Chinese People's Political Consultative Conference which focuses on a number of regulatory and tax reforms as well as the central and local government taxes and tax burden reduction.