Legal Regulation On Chinese Horizontal Intergovernmental Tax Competition

Finance is the foundation of a nation,and taxation is the important tool.The reform of fiscal and taxation system is essentially a process of repositioning power and redistributing interests.Since the reform of tax distribution system in 1994,local governments in China have been endowed with a certain degree of financial autonomy,which objectively provided the initial institutional driving force for tax competition among local governments.In the traditional study,most scholars think that “Inter-government Tax Competition” is a game that the local governments generate economic resources and tax resources to guarantee local interest,such as to promote economic development,to increase government performance and to increase public welfare in the region.For the nineteen report stressed financial reform should highlight the "balance",the "horizontal intern-governments tax competition" in the paper,with "horizontal" suggests that the object of study is mainly for the level of local government or regional government;with the theory of "intergovernmental relations" emphasizes how to realize the coordination and interaction of the relations between local governments in tax system,power relations and interests in tax competition.This paper argues that,transverse house international tax competition is essentially a tax benefit game between local government and interaction,involving political,economic,and other basic relationships between local government coordination and cooperation,legal regulation system construction should be accord with the requirement of modernization of national governance.Competition is a double-edged sword.Similarly,on the one hand,horizontal intergovernmental tax competition may promote differential taxation,which truly reflects the substantive fairness of taxation and the diversification of tax collection and management model.On the other hand,It is also possible to erode the tax base,which will disturb the normal tax system,destroy the sustainable development of local economy,and plunge the taxation of various regions into a vicious circle.Based on the “double-edged” of tax competition,the paper thinks the most effective method to fully exert positive effects and offset negative effects of horizontal intergovernmental tax competition,is to establish a sound legal system regulating the tax competition,which will make the competition conducted orderly by following the fiscal and taxation rule.At present,tax legislative power is highly concentrated by the central government.What's more,the center hand more government authority to the local,but master more financial power.Because of the reduction of financial power,local governments often adopt some taxation outside the system in tax competition,which leads to some problems such as unauthorized tax relief,excessive financial subsidies,ease of tax collection and management and obvious local taxation protection.However,the deep institutional reason for the problems is that the allocation of tax legislative power is not systematic,and the allocation of fiscal power to the central government is not matching,government performance appraisal mechanisms are unscientific,and horizontal government relations are not well-coordinated.Based on the reasons,this paper follows the perspectives of “fiscal decentralization”,,and combines the basic theories of “government competition”,“government relations” and “government performance” theory to examine the progress of China's horizontal intergovernmental tax competition.For the institutions causes of the problems,we can solve the problems by improving the systemization of the allocation of tax legislative power,the matching of central government fiscal authority,the scientificization of the government performance appraisal mechanism,and the normalization of horizontal intergovernmental relationship coordination systems.Last but not least,the system assumptions and specific proposals for the legal regulation of the horizontal inter-governmental tax competition in China are of great significance to promote the rule of law for the fiscal and taxation,as well as the modernization of state governance.