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The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China

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  • Junmin Wan

Abstract

Indirect tax such as sales tax collection is difficult as the government has difficulty monitoring the actual economic dealings. To bring out private information on transaction only known to a firm and a consumer, China's government has set up a lottery receipt system which has been tried out in many areas. This paper empirically examines the validity of this new system. Estimation is performed based on panel data for different periods during 1998-2003 from a total of 37 districts in Beijing and Tianjin. It is found that the lottery receipt experiment (LRE) has significantly raised the sales tax and the growth of sales tax and total tax revenues. Copyright (C) 2010 Blackwell Publishing Ltd.

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  • Junmin Wan, 2010. "The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China," Review of Development Economics, Wiley Blackwell, vol. 14(s1), pages 611-624, August.
  • Handle: RePEc:bla:rdevec:v:14:y:2010:i:s1:p:611-624
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    References listed on IDEAS

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    1. Junmin Wan, 2006. "The Incentive to Declare Taxes and Tax Revenue: The Lottery Receipt Experiment in China," Discussion Papers in Economics and Business 06-25, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    2. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
    3. Kim, Junghun, 2005. "Tax reform issues in Korea," Journal of Asian Economics, Elsevier, vol. 16(6), pages 973-992, December.
    4. Papke, Leslie E., 1994. "Tax policy and urban development : Evidence from the Indiana enterprise zone program," Journal of Public Economics, Elsevier, vol. 54(1), pages 37-49, May.
    5. Raymond Fisman & Shang-Jin Wei, 2004. "Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 471-500, April.
    6. Christopher Bajada & Friedrich Schneider, 2005. "The Shadow Economies Of The Asia-Pacific," Pacific Economic Review, Wiley Blackwell, vol. 10(3), pages 379-401, October.
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    Cited by:

    1. Bruhn, Miriam & McKenzie, David, 2013. "Entry regulation and formalization of microenterprises in developing countries," Policy Research Working Paper Series 6507, The World Bank.
    2. Giebe, Thomas & Schweinzer, Paul, 2014. "Consuming your way to efficiency: Public goods provision through non-distortionary tax lotteries," European Journal of Political Economy, Elsevier, vol. 36(C), pages 1-12.
    3. Fabbri, Marco, 2015. "Shaping tax norms through lotteries," International Review of Law and Economics, Elsevier, vol. 44(C), pages 8-15.
    4. World Bank, 2014. "More Jobs, Better Jobs : A Priority for Egypt," World Bank Other Operational Studies 20584, The World Bank.
    5. Enrique Fatas & Daniele Nosenzo & Martin Sefton & Daniel John Zizzo, 2015. "A self-funding reward mechanism for tax compliance," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 15-16, School of Economics, University of East Anglia, Norwich, UK..
    6. Carlos Viana de Carvalho & Ricardo Masini & Marcelo Cunha Medeiros, 2016. "ARCO: an artificial counterfactual approach for high-dimensional panel time-series data," Textos para discussão 653, Department of Economics PUC-Rio (Brazil).

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