Abstract
After the reform of the tax system, with the upward movement of financial power and the decentralization of power, the financial pressure of local governments in China has become increasingly prominent. As the previous model concluded, fiscal pressure may be the driving force behind the increase in local government public service charges. Therefore, it is necessary to study the interaction between financial pressure and public service charges. In this paper, it mainly researches two-way interactive effect between financial pressure and public service charges. The data of 31 provinces in China from 1999 to 2017 was used to construct the simultaneous equations model for fiscal pressure and public service charges, and then the empirical test was carried out for the interactive effect between the two with 3sls method. The research results show shown that there is an interactive effect between fiscal pressure and public service charges. That is, the public service charges is increased with the increase of fiscal pressures, explaining that when the government is facing financial pressure, the government will look for public service charges to make up for the gap in fiscal revenue and expenditure. The fiscal pressure is decreased with the increase of public service charges, explaining that public service charges are an effective way to ease financial pressure. In addition, the effect degree of the control variables related to financial autonomy and public service charges was analyzed in this paper.
Highlights
As everyone knows that public service charges play an important role in China
The research results show that there is a positive correlation between financial pressure and public service charges when financial pressure affects public service charges
There is a negative correlation between public service charges and financial pressure when public service charges affect financial pressure
Summary
As everyone knows that public service charges play an important role in China. the charging status is different in different levels of government, which is getting higher and higher from the central to the local [1]. They must reduce the burden on enterprises, making the tax revenues reduce, resulting in a situation that the revenue could not cover the expenditure and local governments must face the increasing financial pressure [5]. The correlation between the influence factors of financial pressure and public service charges is not considered and there is a multiple collinearity problem in the regression process, affecting the rationality of the research results. In this paper, it researched the current literature and sorted out the interactive effect between the two, as well as established a theoretical framework and considered the relevant factors that affect the financial pressure and public service charges. The panel data of provinces from 1999 to 2017 was used to establish simultaneous equations for financial pressure and public service charges, and three-stage least squares method was used to carry out an empirical test for their two-way interactive effect
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
