The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China
AbstractWe 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.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 06-25.
Length: 37 pages
Date of creation: Sep 2006
Date of revision:
tax evasion; business tax; lottery receipt experiment; random trend (growth) model;
Find related papers by JEL classification:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-03 (All new papers)
- NEP-CNA-2006-09-03 (China)
- NEP-EXP-2006-09-03 (Experimental Economics)
- NEP-FMK-2006-09-03 (Financial Markets)
- NEP-PBE-2006-09-03 (Public Economics)
- NEP-PUB-2006-09-03 (Public Finance)
- NEP-SEA-2006-09-03 (South East Asia)
- NEP-TRA-2006-09-03 (Transition Economics)
- NEP-UPT-2006-09-03 (Utility Models & Prospect Theory)
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