Tax Collector or Tax Avoider? An Investigation of Intergovernmental Agency Conflicts
研究中国地方政府作为税收征收者和企业控股股东的双重角色冲突，发现2002年分税制改革导致地方政府控制的公司更多避税，且与地方财政赤字正相关。
ABSTRACT 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. JEL Classifications: H26; H71; M40; G38.