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China's Tax-for-Fee Reform and Village Inequality

Author

Listed:
  • James Alm

    (Department of Economics, Tulane University)

  • Yongzheng Liu

    (Department of Economics, Andrew Young School of Policy Studies, Georgia State University)

Abstract

In the late 1990s, China enacted a rural tax reform known as the "Tax-for-Fee Reform" (TFR), largely driven by a desire to address farmers' complaints about their perception of a heavy and regressive tax burden. This paper examines the impact of the TFR on inequality in rural villages in China. Our results suggest an effective role of the TFR in reducing inequality within villages. Its impact on a consumption-based measure of inequality took effect immediately; its impact on per capita household income inequality took somewhat longer. Our results also suggest that it is "rich" and/or "coastal" villages that exhibited a significant reduction of inequality from the TFR, while "poor" and/or "inland" villages experienced no significant changes in inequality from the reform.

Suggested Citation

  • James Alm & Yongzheng Liu, 2013. "China's Tax-for-Fee Reform and Village Inequality," Working Papers 1304, Tulane University, Department of Economics.
    • Handle: RePEc:tul:wpaper:1304
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    More about this item

    Keywords

    tax-for-fee reform; inequality; rural China;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • I2 - Health, Education, and Welfare - - Education
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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