IDEAS home Printed from https://ideas.repec.org/a/wsi/serxxx/v57y2012i01ns0217590812500051.html
   My bibliography  Save this article

The Impact Of Fiscal Decentralization On Tax Effort Of China'S Local Governments After The Tax Sharing System

Author

Listed:
  • JR-TSUNG HUANG

    (Department of Public Finance, National Chengchi University, No. 64, Sec. 2, Zhi-nan Rd., Wenshan, Taipei 11605, Taiwan)

  • KUANG-TA LO

    (Department of Public Finance, National Chengchi University, No. 64, Sec. 2, Zhi-nan Rd., Wenshan, Taipei 11605, Taiwan)

  • PO-WEN SHE

    (Department of Economics, University of Essex, UK)

Abstract

The purpose of this study is to investigate whether and to what extent fiscal decentralization affects tax effort of local governments in China after the Tax Sharing System (TSS). This research provides different indexes of tax effort and fiscal decentralization in analysis. By using the panel data of 31 regions in China during the period of 1996–2006 and the two-way fixed-effect model, the empirical results show that fiscal decentralization has a significantly positive impact on tax effort of local governments. In addition, this positive influence of fiscal decentralization on tax effort increases over time. Finally, trade openness and industrialization level also will enhance the local government's tax effort.

Suggested Citation

  • Jr-Tsung Huang & Kuang-Ta Lo & Po-Wen She, 2012. "The Impact Of Fiscal Decentralization On Tax Effort Of China'S Local Governments After The Tax Sharing System," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 57(01), pages 1-22.
    • Handle: RePEc:wsi:serxxx:v:57:y:2012:i:01:n:s0217590812500051
    DOI: 10.1142/S0217590812500051
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217590812500051
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217590812500051?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jorge Martínez Vázquez & Robert M. McNab, 2006. "Fiscal decentralization, macrostability and growth," Hacienda Pública Española / Review of Public Economics, IEF, vol. 179(4), pages 25-49, September.
    2. Agúndez-García, Ana, 2000. "Fiscal Revenues Decentralization And Regional Economic Growth," ERSA conference papers ersa00p272, European Regional Science Association.
    3. Mr. Taimur Baig & Mr. Abdul d Abiad, 2005. "Underlying Factors Driving Fiscal Effort in Emerging Market Economies," IMF Working Papers 2005/106, International Monetary Fund.
    4. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2014. "Societal Institutions and Tax Effort in Developing Countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 301-351, May.
    5. James Alma & Jorge Martinez-Vazquez & Friedrich Schneiderb, 2005. "'Sizing' the Problem of the Hard-to-Tax," Contributions to Economic Analysis, in: Taxing the Hard-to-tax: Lessons from Theory and Practice, pages 11-75, Emerald Group Publishing Limited.
    6. Bahl, Roy W. & Wallich, Christine, 1992. "Intergovernmental fiscal relations in China," Policy Research Working Paper Series 863, The World Bank.
    7. M. Nagy Eltony, 2002. "Measuring Tax Effort in Arab Countries," Working Papers 0229, Economic Research Forum, revised 03 Oct 2002.
    8. Jorge Martinez-Vazquez & LF Jameson Boex, 1997. "An Analysis of Alternative Measures of Fiscal Capacity for Regions of the Russian Federation," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9704, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2014. "Societal Institutions and Tax Effort in Developing Countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 301-351, May.
    10. Ms. Janet Gale Stotsky & Ms. Asegedech WoldeMariam, 1997. "Tax Effort in Sub-Saharan Africa," IMF Working Papers 1997/107, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mustafa Kiziltan & Ahmet Burcin Yereli, 2023. "Evaluating local fiscal capacity and fiscal effort of Turkish local governments: Evidence from spatial panel data analysis," Economic Change and Restructuring, Springer, vol. 56(1), pages 441-472, February.
    2. Wei Kong & Wenxiu Hu & Kaicheng Liao & Xiaoqiang Ma, 2021. "Local Financing Platform Loan and Performance of City Commercial Banks: Evidence from City Commercial Banks in China," Hacienda Pública Española / Review of Public Economics, IEF, vol. 238(3), pages 81-99, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Torgler, Benno & Schneider, Friedrich, 2009. "The impact of tax morale and institutional quality on the shadow economy," Journal of Economic Psychology, Elsevier, vol. 30(2), pages 228-245, April.
    2. Torgler, Benno & Schneider, Friedrich, 2007. "Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis," Berkeley Olin Program in Law & Economics, Working Paper Series qt26s710z8, Berkeley Olin Program in Law & Economics.
    3. Sena Kimm Gnangnon, 2020. "Effect of Development Aid on Tax Reform in Recipient-Countries: Does Trade Openness Matter?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-23, January.
    4. Gustavo Canavire-Bacarreza & Nicolas Guadalupe Zuniga Espinoza, 2010. "Fiscal Transfers a Curse or Blessing? Evidence of Their Effect on Tax Effort for Municipalities in Sinaloa, Mexico," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1030, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Amjad Ali & Marc Audi, 2018. "Macroeconomic Environment and Taxes Revenues in Pakistan: An Application of ARDL Approach," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(1), pages 30-39, March.
    6. Musharraf Cyan & Jorge Martinez-Vazquez & VIoleta Vulovic, 2013. "Measuring tax effort: Does the estimation approach matter and should effort be linked to expenditure goals?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1308, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Qian WANG & Chunli SHEN & Heng-fu ZOU, 2009. "Local Government Tax Effort In China: An Analysis Of Provincial Tax Performance," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 29, pages 203-236.
    8. José Antonio Alonso & Carlos Garcimartín, 2011. "Does Aid Hinder Tax Efforts? More Evidence," Discussion Papers 11/04, University of Nottingham, CREDIT.
    9. Gangadha Prasad Shukla & Duc Minh Pham & Michael Engelschalk & Tuan Minh Le, 2011. "Tax Reform in Vietnam," World Bank Publications - Reports 26851, The World Bank Group.
    10. Jorge Martinez-Vazquez, 2006. "Pakistan: A Preliminary Assessment of the Federal Tax System," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0624, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Gnangnon, Sèna Kimm, 2020. "Internet and tax reform in developing countries," Information Economics and Policy, Elsevier, vol. 51(C).
    12. Abhijit Sen Gupta, 2007. "Determinants of Tax Revenue Efforts in Developing Countries," IMF Working Papers 2007/184, International Monetary Fund.
    13. James Alm & Jorge Martinez-Vazquez, 2007. "Tax Morale and Tax Evasion in Latin American Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0732, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    14. Mr. David A. Grigorian & Mr. Hamid R Davoodi, 2007. "Tax Potential vs. Tax Effort: A Cross-Country Analysis of Armenia's Stubbornly Low Tax Collection," IMF Working Papers 2007/106, International Monetary Fund.
    15. Oasis Kodila-Tedika & Mihai Mutascu, 2014. "Shadow economy and tax revenue in Africa," Economics Bulletin, AccessEcon, vol. 34(1), pages 469-479.
    16. Jude Ohi Ikhatua & Peter Okoeguale Ibadin, 2019. "Tax Revenue Effort in Nigeria," Accounting and Finance Research, Sciedu Press, vol. 8(1), pages 103-103, February.
    17. Mr. Paulo Drummond & Mr. Wendell Daal & Mr. Nandini Srivastava & Mr. Luiz E Oliveira, 2012. "Mobilizing Revenue in Sub-Saharan Africa: Empirical Norms and Key Determinants," IMF Working Papers 2012/108, International Monetary Fund.
    18. Benno Torgler, 2003. "Tax Morale in Transition Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 15(3), pages 357-381.
    19. Manamba Epaphra, & John Massawe,, 2017. "Corruption, governance and tax revenues in Africa," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(4), pages 439-467, October.
    20. Jaime Bonet Moron & Fabio Rueda Devivero, 2013. "Esfuerzo fiscal municipal en Guatemala," Revista Economía y Región, Universidad Tecnológica de Bolívar, vol. 7(2), pages 5-41, December.

    More about this item

    Keywords

    Fiscal decentralization; tax effort; tax sharing system; China; C33; H11; H77;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:serxxx:v:57:y:2012:i:01:n:s0217590812500051. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/ser/ser.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.