Decentralization in Taxation, Behavior Alienation of Local Government and Tax Compliance of Listed Companies in China

This paper focus on Chinese tax decentralization reform in 2002. In the paper we firstly want to explain the change of tax administration force of local tax bureau after 2002 tax reform. Next, we use the data of listed companies to examine the effect on the listed companies' tax evasion by the tax reform. The results show that that 2002 reform induced the tax administration force significant decrease and this phenomenon was especially significant in the rich tax resource provinces. And when the local tax administration force decline, the tax evasion of listed companies had an obviously increase after 2002. Our research also implies the 2002 macroeconomic reform induces the microeconomic subjects-listed companies have more motivation to make tax evasion and the consequence is the total tax revenue must decrease, which means the reform is not effective.