Does CBDC launch increase tax collection? empirical evidence from China

Muhammad Umar

Finance Research Letters, 2025, vol. 71, issue C

Abstract: This study explores the impact of the introduction of Central Bank Digital Currency (CBDC) on tax collection. Using data from Chinese provinces between 2000 and 2021, it examines how the pilot launch of CBDC has influenced provincial tax revenues. A difference-in-differences estimation method is employed for the analysis. The empirical findings show that the adoption of CBDC in pilot provinces has led to higher tax collection compared to those that did not implement the pilot. A detailed analysis further reveals that this impact is more pronounced in smaller provinces. Furthermore, the CBDC launch has positively impacted on the collection of value-added tax (VAT), corporate income tax, and personal income taxes. These results provide empirical evidence of the CBDC's effect on tax collection and offer important insights for policymakers.

Keywords: CBDC; China; Tax collection; CBDC Pilot; Provincial data (search for similar items in EconPapers)
JEL-codes: E42 H26 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324015150

DOI: 10.1016/j.frl.2024.106486

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