How distortive are turnover taxes? Evidence from China

• 成果类型: Article
• 署名作者: Xing, Jing; Bilicka, Katarzyna; Hou, Xipei; Raei, Sepideh
• 署名单位: Shanghai Jiao Tong University; Utah System of Higher Education; Utah State University; National Bureau of Economic Research; Shanghai University of Finance & Economics
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2024.103332
• 发表日期: 2024
• 关键词: Turnover tax; Value-added tax; Outsourcing; R&D investment

摘要

We investigate the impact of tax cascading on upstream and downstream firms. As a natural experiment, we explore a reform that replaced turnover taxes with value-added taxes for service industries in China, which effectively removed tax cascading. We find a relative increase in sales, R&D investment, and employment for affected service firms. These changes are mainly driven by increased outsourcing from manufacturing firms, and are unlikely to be caused by changes in firms' tax burden or output prices. Our study provides new evidence on how taxation affects supplier networks and firm performance.