Skip to main content
Article thumbnail
Location of Repository


By Qian WANG, Chunli SHEN and Heng-fu ZOU


This paper aims to enhance the understanding of provincial tax performance in China, paying special attention to the recent fiscal reforms in the 1980s and in 1994. Using provincial panel data for the period 1986-2004, our analysis consists of two steps. First, a combined fixed time effects and random provincial effects model is used to analyze the statistical relationship between the tax share in GDP and economic and demographic variables. Results indicate that the decentralized fiscal system over the period 1986–1993 has had a positive impact on the tax share in GDP, whereas the recentralized fiscal system in the period 1994-2004 has had a negative impact. Second, provincial tax effort indices are calculated to estimate potential room for additional taxation. The findings from the analysis have important policy implications on the redistribution of fiscal resources as well as on the effectiveness of the tax administration.TAX EFFORT, TAX CAPACITY, FISCAL REFORMS, FISCAL DECENTRALIZATION

OAI identifier:

Suggested articles


  1. (1971). A Regression Approach to Tax Effort and Tax Ratio Analysis.‖ IMF Staff Papers,
  2. (1972). A Representative Tax System Approach to Measuring Tax Effort in Developing Countries‖
  3. (1993). Advisory Commission on Intergovernmental Relations (ACIR),
  4. Advisory Commission on Intergovernmental Relations (ACIR),1982, Tax Capacity of the Fifty States : Methodology and Estimates.
  5. (2001). An Econometric Analysis of Local Fiscal Response to Revenue Sharing
  6. (1986). An empirical analysis of state and local tax structure in the context of the Leviathan model of government‖
  7. (2008). Bridging Fiscal Divergence in China.‖ Dissertation,
  8. (1968). Comparing International Tax ‗Burdens‘: a suggested Method.‖
  9. (2003). Decentralization and Local governance in China‘s Economic Transition‖ Conference: The Rise of Local Governments in Developing Countries, London School of Economics,
  10. (1982). Determinants of Tax Ratio: a cross-country analysis.‖
  11. (1997). Financing Local Government in the People’s Republic of China. Hong Kong:
  12. (1988). Fiscal decentralization and government size‖
  13. (2006). Fiscal Decentralization in China Revisited.‖ Working Paper,
  14. (1998). Fiscal decentralization, public spending, and economic growth in
  15. (1998). Fiscal Dualism in China: Gradualist Reform and the Growth of Off-Budget Finance‖,
  16. (1972). Fiscal Federalism.
  17. (1992). Fiscal Reform and Local Industrialization: The Problematic Sequencing of Reform in
  18. (1969). Fiscal Systems.
  19. (2001). Inter-Governmental Fiscal Relations: The Facilitator
  20. (1992). Intergovernmental Fiscal Relations in China," Working Papers, Country Economics Department, World Bank,
  21. (2003). Measuring Tax Effort In
  22. (2002). Measuring Tax Effort in Arab Countries.‖ Arab Planning Institute (API) Working Paper,
  23. (1981). Measuring the Fiscal Capacity and Effort of State and Local Areas.
  24. (1987). Quantitative Characteristics of the Tax Systems of Developing Countries‖,
  25. (1987). Région et Développement 235 Nelson Michael A,
  26. (1985). Searching for Leviathan :
  27. (1990). State Fiscal Capacity and Effort.
  28. (1993). State Fiscal Capacity and Tax Effort.
  29. (2001). State policy under devolution: Redistribution and Centralization.‖
  30. (1992). Structural factors and tax revenue in developing countries: a decade of evidence‖,
  31. (2004). Tax Performance: A Comparative Study.‖
  32. (1991). Tax Shares in Developing Economies.‖
  33. (1980). The Power to Tax: Analytical Foundations of a Fiscal Constitution. Cambridge :

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.