Study On The Local Government Fiscal Competition At The Present Stage In China

In recentyears, Local government fiscal competition gradually becomes a hot topic in academia. Fiscal competition is the product of fiscal decentralization, including tax competition, financial transfer payments competition and fiscal expenditure competition. Tax competition is the major form of fiscal competition, in thegap of imperfect tax system,the local government introduced tax incentives in the limited privileges,to attract foreign capital investmentand reduce tax rates while increasing regional tax revenue by broadening the tax base.On January 1, 2015, the “new budget law”determines the subject status of general transfer payments, the autonomy of dominating makes it become the target of local government competition. The increase of the proportion of general transfer payments will increase the risk of transfer payment of competition.In order to obtain advantages in the competition and create more favorable condition for fiscal revenue competition,local governments continue to strengthen infrastructure construction, so the financial expenditure competition appears. Fiscal competition has long been recognized and has two sides, the analysis of its advantages and disadvantages has always been the focus of academic discussion.This paper analyzes the competition degree and the law of all kinds of financial means of competition, from the fiscal competition between local governments in China present situation, on the base of drawing lessons from foreign experience,analyzes the the cause of this phenomenonandcomes up with countermeasures to solve the problems of fiscal competitionfrom government function positioning,the improvement of the related system and the direction of competition guidance.Because of similar natural resources and environmental conditions,areas adjacent to each other are favored the same by the central government’s policy convergence,as a result,fiscal competition is more likely to occur between adjacent local governments. Based on this idea,this article adopts the method of spatial econometric,building adjacent matrix,to analyze the aggregation and interact fiscal competition among local governments,on this basis,and determines the level of competition and its development.In the analysis of the existing problems of the competition,this part also uses the spatial econometricmethod to establish a spatial lagged regression model, and then put forward the countermeasures to solve the problem.This paper can be divided into eight parts.Chapter 1 is introduction. It introduces the research background, research purpose and significance, research methods and the main innovation and shortcomings of the article, etc. Because the financial revenue and fiscal expenditure competition are the complement of each other, so that the study of fiscal competition simply analyzes revenue or expenditure competition is biased, we should combine two aspects of competition into consideration. Chapter 2 is literature review. It introduces the study of fiscal competition history and trends. Although study in foreign countries started early, it also has experienced a fairly long blank period, until the seventies of last century began to study tax competition, and then into the research of fiscal expenditure competition.Although domestic research on fiscal competition is from the beginning of this century, the study of fiscal competition has accumulated rich achievements, and attract the attention of many scholars nearly two years.Chapter 3 is the basic theory of fiscal competition. It summarizes the fiscal competition theory origin of fiscal decentralization theory, theory of government behavior and government competition theory. And we make it clear that the fiscal competition has three kinds of concrete formsin this chapter, including tax competition, transfer payments and fiscal expenditure competition, the former two collectively referred to as revenue competition. Chapter 4 is empirical analysis of local government fiscal competition situation and the degree of competitionin China. This part uses spatial econometric methods to analyze the present situation ofthe tax competition, the transfer payments and financial expenditure competition. The study found that in addition to the area of transfer payment competition affected by the policy, the scope of other competition mainly concentrated in the eastern coastal range. Tax competition is still the main means of competition.Transfer payments competition rises sharply in recent years, while the fiscal expenditure competition is relatively weak in our country.Chapter 5 is the major problems of local government fiscal competition. On the analysis of the pros and cons of the local government fiscal competition, this part puts forward that the fiscal competition promotes the local economy,at the same time, reduces the overall fiscal revenue, crowds out spending on science、technology and people’s livelihood, increases the gap between rich and poor, and has the “ flypaper ” effect.Chapter 6 analyzes the the main problems of the local government fiscal competition. Because of the defects of the financial management system, the power limit of the government and the market, the central and the local authority is not well handled, while the direct cause of the fiscal competition is the driving of the local interests and the performance evaluation.Chapter 7 is the enlightenment and main methods of typical foreign countries fiscal competition to our country. This part elects the UK, Japan and the United States, presented their fiscal competition history and experience.Highly centralized regime weakened the fiscal competition in Britain. Japan emphasized the government’s support of local business, changed management into service,but the United States transform the fiscal competition into fiscal cooperation. And then,it sums up that the reasonable scope of their function and power,the system of standardization, competition orientation and perfect supervision mechanism are conducive solution to the problem.Chapter 8 is the measures of fiscal competition between local governments. Aiming at the problems in chapter 6, combined with oversea experience in Chapter7, this part puts forward that the government should perfect our country’s tax system, establish the concept of local government service, advocate the competition of "soft environment", reduce the pressure on local finance in the economy and eliminate poor motivation of fiscal competition.