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Research On Fiscal Decentralization Chinese-style, Behavior Alienation Of Local Government And Its Correction

Posted on:2015-06-05Degree:DoctorType:Dissertation
Country:ChinaCandidate:J G YuanFull Text:PDF
GTID:1316330428474991Subject:Public Finance
Abstract/Summary:PDF Full Text Request
Since the1970's, decentralization reform has been a common policy which is chosen by both developing and developed countries, while the results of the reforms are very different. Compared with other counties'decentralization reforms, the Chinese-style decentralization reform is assuredly considered a huge success in the world. And with the mutual promotion of the gradual reform and opening-up policy, China's decentralization reforms has become an important part for economic system reform which is the procedure of establishing the socialist market economy institution. Economic reform process showed a strong path dependence and progress step by step, which is distinctly different in institutional background and implementation mechanisms with the Western and other developing countries. The most prominent characters of Chinese style are that China's decentralization reform is beginning with the high level centralization of government, and under the leadership of the Communist Party of China who serves the people wholeheartedly, the central government promote the implementation of fiscal decentralization by top-down supply type,"feeling the stones" in the decentralization reform process, the overall goal of the economic system reform of the socialist market economy institution has been gradually clear-cut. Local governments have limited autonomy self-interest in the reform process, the party's ruling concept implemented through the party's ideological and political organization and leadership progressively.China's decentralization reform is still regarded as a course, which the power is essentially transferred from the central to local and the government to the market. Market-oriented and localized power allocation has no essential difference with other countries abroad; however, the more important reason for success of China's decentralization reform is that decentralization reforms drive the local governments to target at promoting economic growth through political incentives.Traditional analysis of local government ignores the heterogeneity of multi-levels of government, regarding that central government and local governments are homogeneity,which could be " benevolent paternalism " or " Leviathan monster ", however, local government's behavior has its own characteristics in multi-levels settings, such as its performance of public nature, remedying market failure, autonomy, legitimacy, self-interest and so on. But influenced by the specialized incentives, restraint mechanisms, and the actions of local officials, the local government will exhibit different characteristics with the central government. The Chinese-style decentralization reforms, especially tax reform which was established on the basis of centralization, valuing the revenue decentralization while neglecting the authority demarcation, and the incentive and restrain mechanisms of it is still defective. Central and local government decentralization contract theory model with specified action (clear division of powers) takes that the central government should give local governments a fixed income to achieve optimal contractual arrangements in the specified actions. While in the hidden action case (division of powers is not clear, local governments have greater freedom of action), the central government must set proper incentives in a decentralized contract, otherwise it will lead to an agent being inactive or cause self-serving interests damaging the client's interest. The Chinese-style decentralization reforms with ill-defined powers, local governments lack formal contract revenue. Relying on methods such as political incentives, informal contract revenue faire of informal compensation incentive, the central government has successfully guide the local governments realizing the rapid economic growth around central government's objective. In the progressive reform process, local government sometimes act positively to achieve public functions and objectives, and sometimes act as adaptive response which is described by the public choice theory as behavioral variations thus deviating from the original intention of the reform. Local governments take the main basic public services expenditure responsibilities since the implement of decentralization reforms especially the reform of the tax system, but the local governments'tax revenues and powers and are severe asymmetry of expenditure responsibilities and now facing enormous financial pressure. This reality leads to behavior alienation of the local government, including the offside and absence in microeconomic intervention of local government, interrupting macroeconomic stability in chasing local interests, distortions in fiscal expenditure structure and direction, shortage of fundamental public service, and the government revenue highly depended on non-tax revenue. All these alienations accumulated deep-seated contradictions and problems in the process of rapid economic growth since China's reform and opening up.To regulate the alienated local government behavior, we need to further deepen and improve the decentralization reform. Firstly, reasonably divide the scope of the central and local powers. It is necessary to transform government functions, correctly handle the relation between government and the market, particularly the relationship between government and enterprises, reform the cadre appraisal mechanism, and change the construction finance to public service finance. It is necessary to allocate reasonable division of powers and expenditure responsibilities in accordance with the requirements of public service finance between all levels of government Reasonable division of powers and expenditure responsibilities need to fully consider the characteristics of Chinese-style separation of powers, and adapt to the political system, It should reflect the priority of efficiency with due consideration to fairness, adhere to the principle of benefit, achieve the statutory powers clearly. Secondly, promote a rational division in revenues of all levels government. Improving the tax system reform; promoting the under-provincial tax system reform. Thirdly, establish the main taxes status of the property taxes in local governments by drawing the experience from the property of U.S. local fiscal governing mechanism. And establish local fiscal incentives and restraint mechanism of our own country through these three aspect--perfecting fiscal scientific and democratic-decision-making mechanism, fiscal incentives mechanism and fiscal restraint mechanism.
Keywords/Search Tags:fiscal decentralization, fiscal decentralization Chinese-style, behaviorof local government, behavior alienation of local government, China's tax reform
PDF Full Text Request
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