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Article: Evading by any Means? VAT Enforcement and Payroll Tax Evasion in China

TitleEvading by any Means? VAT Enforcement and Payroll Tax Evasion in China
Authors
KeywordsTax evasion
Value-added tax
Payroll tax
Evasion substitution
Issue Date2020
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jebo
Citation
Journal of Economic Behavior & Organization, 2020, v. 185, p. 770-784 How to Cite?
AbstractWe study how the enforcement of value-added tax (VAT) affects Chinese firms’ evasion of payroll tax, which is collected by weakly empowered agencies. Using the central government’s 2005 repeal of the agricultural tax to measure fiscal squeeze and subsequent enforcement effort of VAT collection, our instrumental variable estimation finds that the VAT enforcement leads to a significant increase in the payroll tax evasion. Examining firm heterogeneity and real responses suggests that increased payroll tax evasion mainly stems from cost optimization by small and cash-constrained private firms. Our paper echoes a growing literature to highlight the importance of understanding compliance spillover across taxes.
Persistent Identifierhttp://hdl.handle.net/10722/293805
ISSN
2023 Impact Factor: 2.3
2023 SCImago Journal Rankings: 1.326
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorLi, L-
dc.contributor.authorLIU, KZ-
dc.contributor.authorNie, Z-
dc.contributor.authorXi, T-
dc.date.accessioned2020-11-23T08:22:03Z-
dc.date.available2020-11-23T08:22:03Z-
dc.date.issued2020-
dc.identifier.citationJournal of Economic Behavior & Organization, 2020, v. 185, p. 770-784-
dc.identifier.issn0167-2681-
dc.identifier.urihttp://hdl.handle.net/10722/293805-
dc.description.abstractWe study how the enforcement of value-added tax (VAT) affects Chinese firms’ evasion of payroll tax, which is collected by weakly empowered agencies. Using the central government’s 2005 repeal of the agricultural tax to measure fiscal squeeze and subsequent enforcement effort of VAT collection, our instrumental variable estimation finds that the VAT enforcement leads to a significant increase in the payroll tax evasion. Examining firm heterogeneity and real responses suggests that increased payroll tax evasion mainly stems from cost optimization by small and cash-constrained private firms. Our paper echoes a growing literature to highlight the importance of understanding compliance spillover across taxes.-
dc.languageeng-
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jebo-
dc.relation.ispartofJournal of Economic Behavior & Organization-
dc.subjectTax evasion-
dc.subjectValue-added tax-
dc.subjectPayroll tax-
dc.subjectEvasion substitution-
dc.titleEvading by any Means? VAT Enforcement and Payroll Tax Evasion in China-
dc.typeArticle-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.jebo.2020.10.012-
dc.identifier.scopuseid_2-s2.0-85095949116-
dc.identifier.hkuros318781-
dc.identifier.volume185-
dc.identifier.spage770-
dc.identifier.epage784-
dc.identifier.isiWOS:000646752800014-
dc.publisher.placeNetherlands-

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