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Is the growth of Chinese annual tax revenues unnatural?

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  • van der Hoek, M. Peter
  • Kong, Shuhong

Abstract

The rapid growth of Chinese tax revenues in the past decade is often considered “unnatural” relative to GDP growth. In this paper we investigate this seemingly unnatural growth by presenting different models of the relationship between the annual growth of tax receipts and GDP. The models show different results. We also analyze various factors related to the transition from a centrally planned economy to a market economy, in particular the biased GDP calculation method, changes of the economic structure, tax policy changes and reinforcement of the tax administration. If we eliminate the impact of these factors we find that the growth of Chinese tax revenues is not unnatural, but by and large in line with the growth of GDP.

Suggested Citation

  • van der Hoek, M. Peter & Kong, Shuhong, 2006. "Is the growth of Chinese annual tax revenues unnatural?," MPRA Paper 6311, University Library of Munich, Germany, revised Apr 2007.
  • Handle: RePEc:pra:mprapa:6311
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    References listed on IDEAS

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    Keywords

    Chinese tax revenues;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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