Are sales and taxes ‘sticky’? Empirical evidence of the impact of tax enforcement on tax revenue growth in China

Furong Guo, Shengdao Gan, Wei Yang and Peiying Kuang

Applied Economics Letters, 2021, vol. 28, issue 8, 663-667

Abstract: Despite the global economic downturn, China’s taxation continues to grow rapidly. Although many scholars attribute this phenomenon to macro factors, in this study, we investigate this issue from the perspective of combining enterprises and tax enforcement. Through a regression analysis of data from Chinese listed firms over the 2008–2018 period, we find that tax enforcement can lead to the stickiness of corporate tax expenses, that is, the percentage decrease in tax expenses for a decrease in sales revenue is less than the percentage increase in tax expenses for an equivalent increase in sales revenue. Further analysis shows that tax stickiness exists in multiple taxes, with business tax stickiness being the highest. Tax stickiness provides a new explanation for China’s taxation to maintain rapid growth during economic downturns.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2020.1770675 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:28:y:2021:i:8:p:663-667

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2020.1770675

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().