1. Does taxation have real effects on agricultural output? Theory and empirical evidence from China.
- Author
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Zhong, Chunping, Turvey, Calum, Zhang, Juan, and Xu, Changsheng
- Subjects
TAXATION of farm produce ,AGRICULTURAL productivity ,AGRICULTURAL economics ,AGRICULTURE ,CONSUMPTION (Economics) ,INPUT-output analysis ,FISCAL policy - Abstract
China has a long history of taxing agriculture, with special levies on output. Whether farm households are taxed on a lump-sum basis or as a proportion of output is an important issue. This paper develops a theoretical model to understand better the effects of the lump-sum and proportional taxation on agricultural output. It then empirically investigates the predictions using tax and output data on Chinese agriculture. The theoretical model predicts that lump-sum taxation affects only consumption, while proportional taxation simultaneously affects consumption, capital inputs and final output. Although the main tax policy targeted output, our results suggest that taxation had only a modest impact on output since it was effectively applied as lump sum taxation brought about by localized levies and taxes. [ABSTRACT FROM AUTHOR]
- Published
- 2011
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