Taxational resource curse – evidence from China
Can mining industries do harm to non-mining ones through taxation?
This project investigates discretionary tax enforcement as a channel of a notorious resource volatility curse. In developing countries, tax enforcement may vary in the opposite direction to the variation in tax base. This implies that in resource-abundant regions, effective tax rates of non-resource firms are also affected by economic fluctuations in resource sectors.
China divides firms into mining and non-mining sectors. Project leader Dr Shawn Xiaoguang Chen is exploring how a bigger fluctuation in China’s mining sector profitability translates into a greater volatility of effective tax rates on the non-mining firms. Further evidence uncovered by this project to date suggests the high volatility of taxation harms the non-mining sectors, leading to fewer organisations overall, with the smaller ones finding it hard to survive.
Contact Dr Shawn Xiaoguang Chen
Get in touch+61 8 6488 5655
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