Taxation in decentralizing socialist economies : the case of China
AbstractThe authors analyze the tax system in China, where reforms designed to move the economic system toward a market economy have been occurring for more than a decade. The authors characterize the comprehensive changes in the tax system that could be undertaken in the presence of system-wide reform, especially of prices and enterprises, as well as of more moderate reforms that must suffice in the absence of reforms elsewhere in the economic system. In connection with tax reform per se, they emphasize that it is possible to simplify significantly the rate structure for indirect taxes in the presence of price controls, but a unified rate for value-added tax is undesirable without full decontrol of prices. They also found that the state's role as owner of enterprises must be treated separately from its role as tax collector. All enterprises should pay statutory profits taxes. Negotiation (of the kind that characterizes the contract responsibility system) should be confined to the payments to government from after-tax profits. Those payments could be set to balance incentives to enterprises with the need for the state to earn a return on assets historically provided free to those enterprises. The mode of analysis developed in this paper can be applied to a wider range of economies - whether emerging from a socialist past or not - that are progressing at varying speeds in the interlinked areas of tax reform, price reform, and enterprise reform.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 820.
Date of creation: 31 Jan 1992
Date of revision:
Public Sector Economics&Finance; Banks&Banking Reform; Access to Markets; Environmental Economics&Policies; Economic Theory&Research;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Heady, Christopher J. & Mitra, Pradeep K., 1992. "Commodity taxation with administered and free market prices: theory and an application to China," Journal of Public Economics, Elsevier, vol. 47(2), pages 207-225, March.
- Perkins, Dwight Heald, 1988. "Reforming China's Economic System," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 601-45, June.
- Mervyn A. King, 1986. "The Cash Flow Corporate Income Tax," NBER Working Papers 1993, National Bureau of Economic Research, Inc.
- Chris Heady, 1993. "Optimal taxation as a guide to tax policy: a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 14(1), pages 15-41, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.