Description:
Political budget cycles (PBCs) in western democracies have been extensively examined. Yet, few studies have explored whether there exists a local political budget cycle under authoritarian regimes. This research attempt to address this important question by investigating local cases in China. Unlike previous studies, this research brings the “business” back into the study of political “business” cycles and measures local political taxation cycles at the firm level. Using panel data of 28,750 firm-year observations and provincial government economic and fiscal data from 2004-2018, this article presents empirical evidence of the existence of a political cycle inlocal government tax collection behaviors over the Provincial Congress of the Communist Party (PCCP). However, the political taxation cycles vanish after the adoption of China’s new budget law in 2015. This research extends the existing PBC theory to the context of non-Western democracies by exploring micro-level mechanisms through which local leaders manipulate taxation behaviors to advance political careers. It also contributes to conditional PBC theory and fiscal institutions theory by showing the effectiveness of fiscal rules in dampening local political budget cycles in authoritarian regimes