Tax Collector or Tax Avoider? An Investigation of Intergovernmental Agency Conflicts

• 成果类型: Article
• 署名作者: Tang, Tanya; Mo, Phyllis Lai Lan; Chan, K. Hung
• 署名单位: Brock University; City University of Hong Kong; Hong Kong Shue Yan University; Lingnan University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51526
• 发表日期: 2017
• 页码: 247-270
• 关键词: CORPORATE GOVERNANCE; earnings management; empirical-analysis; noncompliance; performance; BEHAVIOR

摘要

Local governments play dual, but conflicting, roles in China's tax system. That is, they are both tax collectors and controlling shareholders of firms subject to tax payments. We investigate how local governments balance their tax collection and tax avoidance incentives. We find that the conflicts between central and local governments arising from the 2002 tax sharing reform have led to more tax avoidance by local government controlled firms, particularly when the local government's ownership percentage of the firms is higher than the tax sharing ratio. We also find evidence that the overall level of tax avoidance by local government- controlled firms in a region is positively associated with local fiscal deficits. As a high level of government ownership of corporations and intergovernmental tax sharing are common phenomena in many transitional economies, this study offers valuable insights into how the dual roles played by local governments affect tax policy enforcement in these economies.