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Prof. Yi Xiang
Professor of Marketing
China Europe International Business School

ABSTRACT

How does changes in income tax affect sales performance? Our paper explores the link between economic policy and salesforce management at the transactional level, using data from a large apparel retailer in China. The analysis indicates that a nationwide personal income tax cut in October 2018 incentivized those salespersons who benefited from the policy to increase their sales productivity and improved their performance. The performance gain was particularly significant in low-income regions, and was mainly attributed to higher sales in each transaction, rather than more reliance on discounts to boost the number of transactions. In addition, the study shows that the tax cut resulted in a net increase in the government revenue because of higher sales and the subsequent rise in corporate tax payments.