Dissertation > Economic > Fiscal, monetary > Finance, the state's financial > China's financial > Local financial

Study the Gap on Local Government Fiscal Funding

Author CuiChenZuo
Tutor LiLanYing
School Tianjin University of Finance and Economics
Course Finance
Keywords land finance transfer payment Local Debt Property matching
CLC F812.7
Type Master's thesis
Year 2013
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The local government is an important element of the government degree in China. After the system of tax distribution in1994followed with the financial resources centralization and power decentralization, the local government undertakes the important aspects in the provision of public affairs, yet financial resources fail to get balanced guarantee. The local government compensates for the insufficiency of financial resources through the sale of land and other measures. Mean while the Chinese government has taken strong measures to keep prices in proper fluctuation, to alleviate the issue that the price of real estate is too high which leads to the strike of the resources of the local government. This paper is aimed at answering why local government finance funding has shortfall, and offering a solution through local government revenue and expenditure.Firstly, this paper reasons the rationality and the necessity of what mentioned above at the level of public goods, externality theory, transaction cost theory and preference recognition theory to give theoretical support of the local government obtaining financial resources. Tracing back to the ancient China, this paper studies the fiscal relations of central government and local government in various dynasties. In ancient times, the central government is dominant in state affairs, and the social affair of the local government is under the leadership of the central government. The local governments hand up to the central government full financial resources. The local governments are strictly disbursed from the cost and expenses under the control of the highest authority and they are supervised through the competition of the talented and the supervision of finance. In addition, we study the advanced experience of foreign governments in government finances. For example, as the federation of United States, the local government has certain financial to administer social affairs; British practices performance management to improve efficiency in the fiscal funds; The transfer payment system in Germany realizes the regional financial equilibrium; as the centralization of Japan, the central government hold in hand the main power and give the local government tax Legislation to raise financial fund.In China, lack of financial resources of local governments burden a large number of public expenditure, China’s fiscal revenue, land finance play an important aspect of the local fiscal revenue, is not standardized. Local government should be to serve the local residents as a criterion, but not be unduly for the pursuit of economic considerations, it is necessary to regulate the land revenue. In addition, China’s local governments have immense debt and the transfer payment system is not perfect, all the reasons have been issued in increasing in local government finance funding gap and non-standard financial funds.Through legal norms to formulate the central and local government financial authority relationship, they also give local governments a certain right to tax adjustments and increase in the revenue sharing ratio of the norms of the land revenue and local issue of treasury bonds, the transfer payment system to remedy local funds gap, and improve China’s financial system.

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