Abstract
For a large country like China, handling of intergovernmental fiscal relations must create compatible incentives to central and local governments. China initially created a fiscal management system characterized by tax sharing in 1994, basically meeting the needs of its socialist market economic system. Yet further improvements must be made to the assignment of administrative authority and expenditure responsibilities, revenue allocation and the fiscal transfer payment system. This paper is based on the author’s previous research and the recent situation of adjustment in China’s intergovernmental fiscal relations. The paper examines the problems of local-central fiscal relations: insufficient alignment between fiscal revenues and administrative authority; uncertainty of sharing the revenue from income tax and value-added tax; imperfect tax rebate and transfer payment system. Concludes that uncertainties of local fiscal resources inevitably affected the behavior of local governments. The paper describes the land sales revenues of local government as the example how the interplay intergovernmental fiscal relations with other systems threatens socio-economic sustain-ability of China. The following measures in tax reforming are suggested: increasing the share of local governments in VAT distribution; reducing the property tax rates; canceling tax rebates; endowing local governments with certain taxing authority, including legislation and tax rate adjustment. In handling intergovernmental fiscal relations, great attention must be paid to the system’s stability to give play to its function of incentives and restraints. Highlights China must create a hierarchical fiscal management system in line with its modern fiscal system and further standardize the division between administrative authority and expenditure responsibilities China should formalize a fiscal transfer payment system, and develop a hierarchical fiscal management system encompassing the sharing of tax, rents and profits For citation Yang Zhiyong. Local-central Intergovernmental Fiscal Relations of China. Journal of Tax Reform, 2017, vol. 3, no. 2, pp. 92–102. DOI: 10.15826/jtr.2017.3.2.033 Article info Received April 10, 2017; accepted July 31, 2017
Highlights
The Third Plenary Session of the 18th CPC Central Committee in 2013 set the goal of China’s fiscal reform to establish a modern fiscal system
On June 30, 2014, the Political Bureau of the CPC Central Committee deliberated and adopted the Plan for Deepening Overall Reform of the Fiscal and Tax Systems, which calls for adjustments to local-central fiscal relations
The reform should rationalize the allocation of local-central fiscal revenues in line with expenditure responsibilities
Summary
Ян Чжиюн Национальная академия экономической стратегии Китайской академии социальных наук, г. Система фискального управления с распределением налогов, созданная в Китае в 1994 г., в основном удовлетворяла потребности социалистической рыночной экономической системы страны. 92–102 ных полномочий и расходных обязательств различных уровней власти, а также внесения изменений в распределение доходов и систему межбюджетных трансфертов. В ней рассматриваются такие проблемы фискальных отношений между центральным и местным уровнями власти как недостаточное согласование между налоговыми поступлениями и административными полномочиями; неопределенность распределения доходов от подоходного налога и налога на добавленную стоимость; несовершенство налоговых скидок и межбюджетных трансфертов. На примере получения доходов от продажи земли местными органами власти показано, что проблемы межбюджетных отношений во взаимосвязи с другими системами угрожают социально-экономической устойчивости Китая. В Китае должна быть создана система фискального управления соответствующая современной фискальной системе страны и продолжена стандартизация распределения административных и расходных полномочий различных уровней власти. Система межбюджетных трансфертов в Китае должна быть формализована, а иерархическая система финансового управления должна включать распределение между бюджетами налогов, арендной платой и прибылью
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