The impact of fiscal squeeze on corporate tax avoidance behaviors: Evidence from the agricultural tax reform

Fan Zhang, Guanghao Wu, Ling Zhu and Wenzhe Zhang

Economic Analysis and Policy, 2023, vol. 79, issue C, 890-901

Abstract: This paper explores the effect of local fiscal pressure and corporate tax avoidance behavior using the abolish of agricultural tax reform as a quasi-natural experiment. We show that sudden loss of fiscal revenue results in reduction in tax evasion through encouraging firms to improve their productivity. This incentive for tax liability can be strengthened if the firm: (1) located in areas with relatively tough tax enforcement; (2) are non-state-owned enterprises; (3) located in areas where local officials face more promotion incentives; (4) is in highly competitive industries.

Keywords: Fiscal pressure; Corporate tax avoidance; Tax enforcement; Agricultural tax reform (search for similar items in EconPapers)
JEL-codes: E44 H21 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:79:y:2023:i:c:p:890-901

DOI: 10.1016/j.eap.2023.07.002

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