Does Computerized Tax Collection System Improve Budget Credibility Of Revenue?

In modern budget and fiscal system,budget credibility is an important principle to ensure the rational use of fiscal funds.China’s general public revenue budget credibility has been at a low level for a long time,reflecting that there is a large degree of arbitrariness in the process of budgeting and budget execution by finance departments.In the past decade,with the continuous advancement of tax information system construction,China’s general public revenue budget credibility has shown a significant upward trend and has risen to a reasonable range.An interesting question has been displayed by this trend.This paper aims to explore the reasons behind this phenomenon,that is,the impact mechanism of tax information system on public revenue budget credibility.The third phase of the Golden Tax Project,which was implemented from pilot to nationwide,provided us with a quasi-natural experiment to identify the progress of tax informatization.In the regions where the Golden Tax Project was implemented,the tax collection behavior of the lower-level governments within their jurisdiction was disciplined due to the enhanced information centralization of the higher-level governments,making the lower-level governments more willing to collect taxes according to the established plan.This paper measures the impact of the Golden Tax Project on the public revenue budget credibility based on 220 prefecture-level cities in China from 2011-2016.The evidences also supplemented by firm-level tax survey data.I used the staggered difference-in-difference method and the event study model.After ensuring the robustness of the findings,the mechanisms of the impact are further explored.We also provided some practical policy recommendations aiming to address the heterogeneity that exists in the policies.The regression results indicate that:(1)The third phase of the Golden Tax Project has promoted the budget credibility in China.(2)This policy effect is mainly achieved through the enhancement of information superiority from higher to lower levels,which in turn disciplined local government behavior.(3)Further analysis shows that this effect is more pronounced in regions with higher fiscal autonomy due to the central government began to have information superiority.(4)Since the Golden Tax Project III mainly covers taxes other than VAT for the first time,the policy effect is greater in regions with a higher share of non-VAT taxes.(5)The Golden Tax Project still does not include non-tax revenue into the supervision,so the policy effect is better in regions where the proportion of non-tax revenue is smaller.(6)Finally,using rich enterprise data,we find that the taxation behavior of local governments has been regulated.The findings of this paper are based on the objective fact that the degree of tax informatization in China has increased,and provide some referenceable empirical evidence for the establishment of a modern budget system from the perspective of pre-final deviations,as well as practical policy recommendations.