The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China

Junmin Wan ()

No 06-25, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We examine the validity of a new system of taxation called lottery receipts in China theoretically and empirically. Tax collection is difficult as the government difficultly monitors the actual economic dealings. To bring out the private information on transaction known only to a seller and a buyer, the government has set up a lottery receipt system which has been tried out in many areas. If the net revenue from a lottery receipt is invested in pure public goods, the lottery receipt will been purchased even if the consumer has expected quasi-linear utility. By issuing a lottery receipt, the government may prevent tax evasion caused by conspiracies between consumers and firms and collect tax effectively. Estimation is performed based on panel data for different periods from a total of 37 districts in Beijing and Tianjin during 1998-2003. The lottery receipt experiment has significantly raised the business tax, the growths of business tax and total tax revenues.

Keywords: tax evasion; business tax; lottery receipt experiment; random trend (growth) model (search for similar items in EconPapers)
JEL-codes: D81 D82 H26 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-09
New Economics Papers: this item is included in nep-cna, nep-exp, nep-fmk, nep-pbe, nep-pub, nep-sea, nep-tra and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:0625

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