Fiscal Revenue Research Articles

Analysis of Factors Affecting Fiscal Revenue in Guangxi Zhuang Autonomous Region

Analysis of Factors Affecting Fiscal Revenue in Guangxi Zhuang Autonomous Region

The economic effects of tax structure transformation: A study based on the tax reform of China's hainan free trade port

Many developing countries use tax reform as a strategy to support national or regional development. China's tax reform of the Hainan Free Trade Port in 2025 serves this purpose. The reform replaces the existing VAT, consumption tax, vehicle purchase tax, urban maintenance and construction tax, and education fee ("four taxes and one fee") with a sales tax. Previous studies of tax structure reform have rarely addressed the economic impact of such a transition, and few sales tax studies have discussed the issue of optimal tax rates. To study the economic effects of the introduction of sales tax and to find the optimal tax rate, this paper uses the computable general equilibrium (CGE) model to conduct simulation analyses. It is found that the sales tax rate should be 17.16 % to keep the fiscal revenue of Hainan Province more or less unchanged after the ‘four taxes and one fee’ are simplified into sales tax. The total economic volume and sales tax rate show an inverted ‘U’ type relationship, the optimal sales tax rate is about 9.79 %, and the tax rate of GDP, investment, employment growth of 3.82 %, 0.35 %, 3.41 %, respectively, the manufacturing industry and other industries in most of the different degrees of growth. Therefore, we suggest that the average sales tax rate of Hainan Free Trade Port should be around 9.79 %.

Inside and Outside a Monopoly: Transhumant Pastoralists and the Public Management of Pastures in Southern Tuscany (14th–15th c.)

This article focuses on the interaction between transhumant pastoralists and Sienese officials within the public management of pastures in the late medieval city-state of Siena. Between 1353 and 1419, a monopolistic system of accessing common and private pastures in Southern Tuscany, called Dogana dei Paschi, was developed and established by Siena by means of law enforcement, commons expropriation and military conquest. The aim was to provide winter grazing to transhumant herds from the Apennines, the Latium and the Sienese territory in exchange of fiscal revenues. The Dogana, however, suffered from external competition and lack of control, while highly depending on foreign herds from beyond the Sienese borders. Outside the Sienese monopoly of pasturages, transhumant pastoralists were entrepreneurs, livestock owners, and shepherds with freedom of movement because of their citizenship, while under the rule of the Dogana they formed an heterogeneous pastoral community, called vergaria, provided with a special legal status, rights and duties. In both cases, pastoralists and the vergaria were in constant bargaining with Sienese officials in order to be able to graze as much and to pay as less as possible. In this regard, they contributed to shaping the legal framework of the Dogana. Examining archival records from Siena, such as laws, deliberations and trials recorded in the 14th and 15th centuries, this paper explores the legal definition, regulation and perception of transhumant pastoralists in Tuscany. It moreover analyses their bargaining power and interactions with Sienese officials concerning frauds, collusion and trespassing inside and outside Sienese borders, in order to shed light on the social structure and provenance of herders and livestock owners in late medieval Tuscany.

A simple model of internal and external balance for resource‐rich developing countries

AbstractWe present a simple model of internal and external balance that incorporates key features of resource‐rich developing countries (RRDCs). The main result is that ‘government take’—the ratio of fiscal resource revenue to resource output—is a key determinant of the equilibrium real exchange rate (ERER) in these countries. Examining the case of Papua New Guinea, which has grappled with foreign exchange restrictions since 2015, we find that about half of the RER overvaluation estimated at 26% in 2019 would disappear if the current low level of government take was to be lifted to its long‐term average. The analysis has two key takeaways for RRDCs. First, changes in the government take require adjustments to the RER and fiscal policy to maintain internal and external balance. Second, economic adjustments to falls in the take are difficult; therefore, policies seeking to stabilise the take over time to promote macroeconomic stability are recommended.

The effect of house price constraint conditions in land granting on the second-hand housing market: evidence from Beijing, China

ABSTRACT To curb the surge in housing prices, Chinese governments have introduced various measures in the real estate market. House price constraint conditions (HPCCs) are conditions for sale in land granting which restrict the selling price of newly built houses. Such unique practice has been used as price regulation and signal in many cities with little understanding of its impact. This study aims to investigate the effectiveness, mechanism, and cost of HPCCs on the second-hand housing market for policy improvement, completing existing literature primarily focusing on housing policies. We collected data on land granting and second-hand house transactions in Beijing, which was the first to implement HPCCs. Employing difference-in-difference and other empirical techniques, we find that land granting with HPCCs alters buyers’ and sellers’ behaviours and expectations, leading to a significant decrease in the price level and growth rate. However, HPCCs are associated with lower supply, increased speculation, inequality issues, and potential loss of fiscal revenue. Policymakers need to improve HPCCs while considering market-oriented regulation tools.

Analysis of Value Added Tax Revenue in Indonesia from 1990 to 2022

In enhancing welfare and advancing Indonesia, the government plays a crucial role in promoting economic cooperation and implementing effective fiscal regulations, one of which is through optimizing revenue from the taxation sector. Value Added Tax (VAT) is a key tax instrument that serves as an important source of state revenue. As a significant tax instrument, VAT revenue plays several crucial roles, including supporting the state's fiscal revenue, funding infrastructure development, and providing public services. Therefore, this study aims to analyze the factors influencing VAT revenue in Indonesia. This research uses time series data covering the period from 1990 to 2022. The analytical method employed is the ECM (Error Correction Model) analysis to examine both long-run and short-run effects. The independent variables used in this study include Government Consumption, C-Efficiency, and Import Tariffs. Meanwhile, the dependent variable is VAT revenue in Indonesia. The results of this study show that government consumption and C-efficiency has a positive and significant impact on VAT revenue in both the long-run and short-run. Meanwhile, the import tariff variable negatively and significantly impacts long- run revenue, but has no effect in the short run.

From petrodollars to green power: Fiscal stability and green transition in GCC economies

This study examines the influence of fiscal stability, characterized by fiscal buffers, on the green transition in the Gulf Cooperation Council (GCC) economies from 2005 to 2023. We apply two-way fixed effects, system generalized method of moments (GMM), method of moments quantile regression (MMQR), and panel causality analysis to explore these dynamics. Our findings underscore that a positive fiscal buffer resulting from a significant spread between oil prices and fiscal breakeven levels exerts a substantial positive impact on green transition efforts in GCC countries. The results reveal that countries with higher levels of renewable energy production capacity and urbanization demonstrate more pronounced advancements in green transition initiatives. Conversely, countries grappling with unstable macroeconomic conditions, such as high inflation and external debt, face considerable challenges in achieving significant improvements in green transition outcomes. Additionally, our analysis shows that fossil fuel energy fiscal subsidies negatively influence green transition efforts in the GCC region. Our study emphasizes that policymakers in GCC countries should pursue a dual-pronged strategy: leveraging positive fiscal buffers to diversify their economies in light of potential benefits from high oil prices, and channelling oil and fiscal revenues towards enhancing renewable energy production capacities. This approach aims not only to diversify economic foundations but also to strategically strengthen the infrastructure necessary for sustainable renewable energy transitions in the region over the long term.

Flattening of government hierarchies and growth of farmers’ income

Continuously raising farmers’ income is important for poverty reduction. In a multilevel government system, institutional arrangements can influence the role of grassroots governments in economic and social development. Based on the rural statistical data of 743 townships in Province A in central China from 2001 to 2012, we use the difference-in-differences (DID) approach to investigate the effect of the reform of flattening governmental hierarchy at the township level on increasing farmers’ income. We find that the reform of grassroots flattening hierarchies significantly promotes the growth of farmers’ income. Specifically, in the face of economic-assessment pressure from the higher-level government and the incentives of fiscal excess revenue in the reform, the township government will make full use of the greater administrative power and resources endowed by the reform to vigorously attract investment to increase the number of enterprises and provide farmers with more non-agricultural employment opportunities, thus raising their wage income. Moreover, this reform’s income-increasing effect is more obvious in townships that are closer to the county seat and have more convenient transportation, a higher level of human capital, and a stronger ability to exercise administrative power.

How does digital finance alleviate fiscal stress? Evidence from China

The impact of digital finance on fiscal stress is an important issue in achieving high-quality financial development. Based on the theoretical analysis of digital finance and fiscal stress, this paper utilizes data from 285 cities in China spanning from 2011 to 2020, empirically tests the impact of digital finance on fiscal stress by employing fixed effect model and spatial Durbin model, and identifies the influence mechanism. The results demonstrate that: (1) The development of digital finance can significantly alleviate fiscal stress, which remains valid after conducting a series of robustness tests. In addition, the impact of digital finance on fiscal stress predominantly originates from the coverage breadth of digital finance. (2) Mechanism analysis reveals that promoting the increase of fiscal revenue and improving the efficiency of fiscal expenditure are crucial mechanisms for digital finance to alleviate fiscal stress. (3) Heterogeneity test indicates that digital finance has a more significant alleviating effect on fiscal stress in central regions and cities with higher levels of economic development. (4) The spatial effect test suggests that digital finance exhibits a significant spatial spillover effect on fiscal stress, and an enhancement in digital finance level in a region will reduce fiscal stress in its neighboring regions. The above findings offer insightful guidance for government to better utilize digital financial tools to manage debt, optimize the structure of fiscal revenue and expenditure, and promote sustainable financial development.

Managing the decline of coal in a decarbonizing China

AbstractPressures to address climate change are eroding the privileged role coal has held in China throughout its modernization. Phasing down coal requires a suite of supply‐ and demand‐side tools to both reduce production (and therefore, maintain sufficiently high prices) and shift to coal alternatives across diverse consumption sectors. This review outlines contours of the coming coal transition by documenting coal's rise in modern China, its status in key debates of today's energy system, and the range of modeling scenarios of coal's future to mid‐century. In addition, through an analysis of current efforts and impacts in four transition policy areas—supply‐side, demand‐side, employment and social impacts, and stranded assets and fiscal revenues—it identifies gaps and future recommendations. Emerging scholarship on enhancing political feasibility and fostering a “just transition” needs to move beyond global cases and address highly localized and temporally bound impacts.This article is categorized under: The Carbon Economy and Climate Mitigation > Future of Global Energy Policy and Governance > National Climate Change Policy

Towards green development: does business strategy affect enterprise green total factor productivity?

This study investigates the influence of business strategy on green total factor productivity (GTFP), focusing on the mediating effect of digital transformation and the moderating effect of organizational legitimacy. Leveraging micro-data from China’s listed industrial enterprises spanning from 2011 to 2021, findings reveal: (1) Prospector strategies exhibit a greater propensity to enhance GTFP compared to defender strategies. (2) Digital transformation partially mediates between business strategy and GTFP. (3) Organizational legitimacy moderates between business strategy and GTFP. Specifically, when a company possesses robust financial standing (pragmatic legitimacy), a better environmental track record (moral legitimacy), and establishment of Environmental Management System certification (cognitive legitimacy), the positive relationship between business strategy and GTFP is strengthened. (4) Further research indicates that business strategy exerts a more pronounced effect on enhancing GTFP for companies with larger scales and weaker political connections, as well as those situated in regions characterized by high fiscal revenue and favorable legal environments.

Does the spatial distribution of afforestation by government and farmers in Beijing follow a random pattern?

The forestland expansion is the joint efforts by various behavioral actors, and among them governments and farmers play a more important role in it. However, their afforestation behaviors haven't be together investigated. Examining Beijing metropolitan area, this research distinguishes between government-led (GA) and farmer-led (FA) afforestation on arable land, and analyzes their spatial characteristics and the influencing factors using Ordinary Least Squares and Geographically Weighted Regression models. Our findings show: (1) Spatial distributions of GA and FA are non-random and systematically organized. GA dominates both in the areas close to the central city and at the outermost edge of the metropolitan area. FA leads in intermediate zones between GA dominant areas. (2) Both GA and FA are rational strategies for land allocation. GA in areas close to the central city is regarded as a trade-off between public benefits of afforestation and potential loss of fiscal revenue, while GA at the metropolitan area's outermost edge prioritizes ecological gains and lower land costs. FA, however, is driven by maximizing household welfare amidst the challenges brought by rural exodus and a rapid aging society. The findings deepen the existing investigations and provide a guidance for spatially organizing GA and synthetically regulating FA.

Italian urban tourism predictions using the holiday Climate Index

The tourism sector is a source of sustenance for local communities, a driver of fiscal revenues and a way to connect local sites to international guests. Its dependence on climate change exposes it to chronic risks such as slowly varying climate patterns. In this paper, we predicted tourism intensity (as the number of beds per square kilometres) according to three Representative Concentration Pathways (RCP) at the municipal level in Italy: 2.6, 4.5 and 8.5. We first estimated a statistical model of tourism intensity using the Holiday Climate Index (HCI) and other drivers. Then, we used the prediction of beds per Km2 to infer changes between 2004 and 2050 according to each RCP scenario of the HCI. We find complex heterogeneous patterns in exposure and a moderate positive effect in the RCP2.6 scenario. However, delayed (RCP4.5) or no climate policy at all (RCP8.5) scenarios present dire consequences for the tourism sector.

Impact of fiscal regulation on regional carbon intensity: assessing the carbon emission reduction effect of transparent government revenue and expenditure

ABSTRACT Fiscal regulations enhance fiscal compliance and reduce undue government intervention in economic performance, which may have important implications for low-carbon development. However, few empirical studies have investigated the impact of fiscal regulations on carbon intensity. Based on data from 278 cities in China from 2005 to 2020, this study constructed a difference-in-differences model using the release of the new Budget Law to investigate the impact of fiscal revenue and expenditure regulation on regional carbon emission intensity. The empirical results indicated that fiscal regulations can significantly reduce the intensity of carbon emissions. The mechanism tests indicate that fiscal regulation can optimize the allocation of local governments’ fiscal revenues and expenditures and improve infrastructure and innovation. Heterogeneity analyses indicate that the effect of fiscal regulation on reducing carbon emission intensity is more obvious in regions with high historical emissions and a high proportion of polluting industries. Based on the empirical results, the government should continuously improve fiscal transparency and the efficiency of fiscal fund use to reduce the impact of unreasonable fiscal revenue and expenditure on carbon emissions intensity.

Assessing the fiscal implications of changes in critical minerals’ demand in the low-carbon energy transition

This study introduces the Fiscal Revenue Risk Index (FRRI), a novel metric designed to assess the impact of market fluctuations in critical minerals due to the materialization of climate-related transition risks on countries highly dependent on these resources. Focusing on minerals essential for renewable energy technologies, such as lithium, cobalt, nickel, and rare earth elements, our analysis evaluates how shifts in global demand might influence government revenues, providing crucial insights for policymakers. The FRRI methodology involves several key steps, including assessing fiscal revenue dependency, estimating price volatility, computing minerals’ production changes for future transition scenarios, and integrating these factors into a weighted risk model. This approach allows the computation of aggregate risk scores across various minerals and scenarios, reflecting a country’s exposure to fiscal risks. The study findings indicate that the demand for critical minerals could grow up to sevenfold over the coming decades, significantly impacting fiscal revenues in emerging markets and developing economies (EMDEs). While these countries stand to benefit from increased exports, they also face challenges related to supply reliability and price volatility. Overall, the FRRI is essential for identifying economic risks and opportunities related to the low-carbon transition in EMDEs.

A study on the interaction between local governments and tea in 19th century China from the perspective of capital theory: Centered on thе Hubei and Hunan region

This study adopts a case study method to investigate the interaction between tea and the local government. From the 18th century to the early 20th century, black tea was an important export commodity of China’s Hubei and Hunan region (两湖地区). The black tea trade between the UK and the Hubei and Hunan region (两湖地区) had driven the rise of black tea cultural capital in the region. The cultural capital of black tea brought economic capital, and the local government increased fiscal revenue by levying likin on tea. The economic capital of black tea transformed into political capital, and the local government could compete with the central government and directly negotiate with foreign governments. To dump products onto China, the British government had to maintain the unity of the Chinese market, choose to ally with the central government and weaken the autonomy of the local government of the Hubei and Hunan region (两湖地区). The local governments turned to seeking support from Russia and developed the brick tea trade. This result led to the gradual inability of the national power represented by the central government to control local governments.

The impact of digital tax administration on local government debt: Based on the revision of the tax collection and administration law

Digital transformation of tax administration, a crucial source of government fiscal revenue, enhances tax collection efficiency and compliance, reduces tax evasion, and increases fiscal revenue, thereby providing more stable funding sources for local governments. This study examines the relationship between digital tax administration and local government debt, using data from Chinese prefecture-level cities from 2009 to 2021. The findings indicate that digital tax administration significantly reduces the level of local government debt. Furthermore, heterogeneity analysis reveals that the impact is more pronounced in the eastern regions and areas with higher levels of informatization. This study aims to provide new perspectives and approaches for the digitalization of tax administration and local government debt management, thereby promoting the modernization of tax governance and the healthy development of local finances.

Impact of fiscal transparency on local fiscal revenue and expenditures: Evidence from a natural experiment

This study examines the impact of fiscal transparency on local fiscal revenue and expenditures through a natural experiment conducted in Jiaozuo, China. Using a synthetic control approach, we analyze data from 1984 to 2008, considering factors such as industrial structure, population, and economic development. The introduction of fiscal transparency reforms in Jiaozuo in 1998 initially led to a significant reduction in per capita fiscal revenue and expenditures, followed by a recovery and growth over time. The findings indicate that fiscal transparency initially restrains fiscal revenue and expenditures due to enhanced scrutiny and improved governance. However, over the long term, it stimulates economic growth and increases fiscal revenue and expenditures. This study highlights the dual impact of fiscal transparency: it initially restricts inappropriate fiscal behaviors while fostering economic growth and fiscal health in the longer term. The case of Jiaozuo provides valuable insights for other regions and countries, especially in the postepidemic era, underscoring the importance of fiscal transparency in improving government accountability and economic resilience.

Efficiency and Welfare Effects of Fiscal Policy in Emerging Economies: The Case of Morocco

This paper studies the welfare cost of fiscal policy in developing economies where a significant fraction of the population is government spending-dependent, using as an example Morocco. We develop a Dynamic General Equilibrium model representing an economy populated by three types of households: Standard Ricardian households with access to the financial market, households who supply labor but have no access to the financial market, and non-active government-dependent households (who behave as hand-to-mouth agents). The paper computes welfare changes of different tax rates and alternative spending policies and quantifies the trade-off of fiscal policy across the different groups of agents. We find that: (i) Distortions from some taxes can be positive due to the presence of public inputs; (ii) Output efficiency can be gained by changing the tax mix while keeping constant fiscal revenues; and (iii) Social welfare gains can be obtained by increasing public investment and reducing government consumption and keeping lump-sum transfers constant.

Fiscal revenue mobilization and digitally traded products: Taxing at the border or behind it?

The unprecedented growth of trade in digitized products has been underpinned by the World Trade Organization (WTO) moratorium on customs duties on electronic transmission, which effectively guarantees the tariff-free nature of this trade. Some countries fear that the current rules inefficiently constrain their policy space and hurt their revenue potential, and have argued for scrapping the moratorium. We examine the optimal role for domestic and border tax instruments in this context. We show that, independently of the future trajectory of trade in digitized products, broad-based nondiscriminatory value-added taxes are preferrable to tariffs both from an economic efficiency and from a revenue standpoint. These taxes are also easier to implement and administer. In this context, the moratorium is a valuable commitment device which can help to effectively channel developing countries’ tax reform efforts in a more efficient direction. This transition would require further investment by the global community in modernizing the tax and customs infrastructure of developing countries to adequately meet revenue needs in the digital era.