Rural tax reform and the extractive capacity of local state in China

Mingxing Liu, Zhigang Xu, Fubing Su and Ran Tao

China Economic Review, 2012, vol. 23, issue 1, 190-203

Abstract: China's fiscal arrangement in the 1980s has preserved local governments' incentive but the 1994 fiscal reform recentralized revenues. Since then, farmers' tax burdens have risen steeply and become a major challenge to the state legitimacy. How to account for the huge regional variation? Why were some localities able to tax more heavily than others? Based on a national survey of village governance in China, we examine farmers' burdens empirically and identify political and social factors that explain the local governments' ability to tax farmers. This paper suggests that developments since the 1990s have shown that it overstates local discretionary power and does not pay enough attention to societal forces in understanding local public finance.

Keywords: Central–local relations; Local public finance; Farmers' burdens; Rural Tax reform; China (search for similar items in EconPapers)
JEL-codes: H22 H71 P52 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:23:y:2012:i:1:p:190-203

DOI: 10.1016/j.chieco.2011.10.002

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