Policy Research On Public Finance And Taxation Of China’s Social Organizations From The Pespective Of State Governance

To promote the modernization of state governance system and ability is the general goal of the comprehensive reform of the Third Plenary Session of the Eighteenth Central Committee of C hina’s Communist Party. To realize the sound interaction and harmonious development of government, market and society is the necessary basis of realizing the modernization of state governance system and ability. Public finance is the basis and important backbone of state governance, and social organization is an important pole of state governance, therefore how to use effective fiscal and taxation tools to promote the sound development of social organization is very crucial for perfecting the state governance system, advancing the fiscal reform and improving the state governance ability.In essence, public finance is a political problem at first, and then an economic problem. From the practice of different countries, the relationship between government and social organization has critically affected the decision of the public finance and taxation policy of social organizations. The distribution of government financial resource and the expenditure preference of the decision-maker will directly affect the scale and development direction of government’s support for social organizations. To reform and innovate the current public finance and taxation policy of social organizations should be based on the national conditions of C hina, and combined with the current situation of social organizations and the fiscal and taxation system. The decision- makers should consider the main problem from the macro, overall and strategic perspective, and make a scientific forecast and evaluation of the public finance and taxation policy results of social organizations both from static aspect and from d ynamic aspect; and carry out the integral and systematic revolution from the aspect of the social governance, resource allocation, income distribution, government function transformation and fiscal sustainability in order to assure the collaboration, integrity, stability and sustainability, and promote the sound development of social organizations.The theoretical significance of this dissertation lies in three aspects: firstly, it considers social organizations as one pole of state governance, and make a new orientation of the public finance and taxation policy of social organizations; secondly, it explores the sound interaction models between government and social organizations; thirdly, it does research on the public finance and taxation policy to suit to the development of social organizations both from static aspect and from dynamic aspect. The practical significance of this dissertation lies in four aspects: first of all, it benefits for strengthening the self-governance ability of social organizations, and improving the resource allocation efficiency of the whole society; then, it benefits for the government function transformation, and decreasing the transaction cost of government providing the public service; moreover, it benefits for stimulating the contribution behavior, and realizing the third distribution; last but not least, it benefits for promoting the overall reform of the fiscal and taxation system of C hina.According to the train of thought “from theoretical analysis to empirical analysis, then to policy suggestions”, this essay is divided into eight chapters and three parts. Part 1 contains chapter 1 to chapter 3, belonging to the theoretical analysis; Part 2 contains chapter 4 to chapter 6, belonging to the empirical analysis; Part 3 contains chapter 7 and chapter 8, belonging to the policy suggestions.Chapter 1 demonstrates the background and significance of this topic, the definition, the scope of the study, the train of thought and main content of the study.Chapter 2 provides a systematic survey of the current papers both home and abroad, and advances the theory evidence of the public finance and taxation policy of social organizations, such as the relation theory between government and social organizations, resource allocation theory, income distribution theory, and the tax basis definition theory. It also concludes the functional orientation and the alternative tools of the public finance and taxation policy of social organizations. Then, it summarizes the policy effects from the aspect of the social governance, resource allocation, income distribution, government function transformation and tax basis erosion.Chapter 3 firstly introduces state governance theory, and demonstrates the roles that social organizations play in the state governance system, and illustrates the transmission mechanism by which the public finance and taxation policy can affect social organizations. Then, it advances the main points of the public finance and taxation policy of social organizations, and clarifies the function orientation of the public finance and taxation policy of social organizations. Lastly, it tells the relationship that the public finance and taxation policy of social organizations of China should pay attention to in the perspective of state governance.Chapter 4 firstly demonstrates the historic evolution and the current situation of social organizations of C hina, and then advances the bottleneck which lies in five aspects —— the low legislation level of social organizations, the lack of the capacity construction of social organizations, the dual management system limiting the admission of social organization, the imbalanced structure of kinds of social organizations and the lack of financing channels of social organizations. Secondly, it teases out the current public finance and taxation policy of social organizations, and concludes that the public finance and taxation policy lacks of the top- level design; the fiscal support is not based on the current situation of social organizations and the public demand of people; the role of the current taxation exemption is very limited, which cannot improve the resource allocation efficiency or encourage the civil charity; fiscal support may lead to the mission-drift of social organizations, and create the adverse incentive.Chapter 5 makes the empirical tests on part of the points in chapter 4 from the individual behavior and the region dimension. In order to understand the effect of fiscal subsidy on the individual behavior of social organizations, this essay chooses the imbalanced panel data of 47 charitable foundations which have got the fiscal subsidy from 2007 to 2013 as the subject, uses the fixed effect models and random effect models to do research on the effect of the subsidy po licy on the financing and public good providing behavior. Hausman test supports the hypothesis of random effect models, and the empirical result demonstrates that direct fiscal subsidy policy is a double-edged sword. On one hand, it plays a great role in s trengthening the capacity construction and the capacity of providing the public good or service of social organizations, on the other, this policy can create the significant crowding-out effect for the donation financing of social organizations, and depress the financing initiative of the foundations, and aggravate the fiscal dependence of the foundations on the subsidy. O n the basis of clarifying the subsidy revenue, the crowding-out effect of the restrictive subsidy is weaker than that of the non-restrictive subsidy, while the restrictive subsidy can encourage the foundations to provide more public goods or service. The estimation results show that the effect of the restrictive subsidy policy is better than that of the non-restrictive subsidy policy. When it comes to the effect of the government support for the development of social organizations in different regions, this essay choose the community service organization of 28 provinces of China as the subject, making both the static panel analysis which supports the fixed effect hypothesis and the dynamic panel analysis which support the systematic GMM. By the empirical results, we can find the government support plays a positive role in promoting the development of the community service organizations, however, great difference of the social service expenditure in different regions will lead to the imbalance of the development of the community service organization. Even though, the density of the community service organization in t-1 period greatly affects that in t period, which means that this kind of effect can aggravate the imbalance of the development of the community service organization in regions.Chapter 6 mainly listed the fiscal subsidy policy, the government procurement policy, the taxation exemption policy, donation deduction policy and taxation regulation policy of social organizationss in different countries. Unlike several developed countries such as the USA, most countries choose the producer-subsidy tools as the main subsidy types, and these policy tools have strong flexibility and adaptability. However, with the introduction of performance tools and the transformation from the producer subsidy to consumer subsidy, the innovation of the tools does not promote the development of social organizations effectively but bring great challenges, meanwhile it aggravates the competition for the clients between the profitable enterprises and social organizations on some extent. The deficit pressure can also cut down the scale of the producer subsidy, and adjust the structure of the project expenditure, A feasible way to overcome the situation is to introduce the social capital and develop the PPP. Government procurement from social organizations should be endowed with the sound legal system and systematic operational guidelines, and the clear responsibility of the contract parties and standardized project management can benefit for the smooth implementation of service procurement and the prevention of fiscal risk. When it comes to the taxation exemption and donation deduction policy, the taxation policy greatly differs in countries as a result of different law systems and the taxation system. Some countries such as the USA, Germany and Japan have strict taxation management on the taxation exemption of social organizations, and also have specific rules about the identification of the taxation exemption and the taxation preference policy; while some countries such as Britain and Australia give the taxation preference according to the revenue type, and their ta xation management is very loose. Some countries such as Singapore have a large range and scale of donation deduction, while others such as Australia and Germany do not. Besides the taxation exemption and the donation deduction, some countries such as the USA and Australia design the regulation tax to assure the justice of the competition and regulate the operation of social organizations.Chapter 7 firstly advances the general framework of the public finance and taxation policy of social organizations in the perspective of the state governance, including the guiding ideology, policy target, principles, the tools and the budget management. Then, it works out the suitable policies about different ability of social organizations, social organizations of different kinds and social organization in different regions.Chapter 8 proposes to build the fiscal and taxation law system of social organizations, to continue to perfect the current fiscal and taxation institutions and to deepen the matching fiscal and taxation institutions reform.