Research On Effectiveness Evaluation Of Equalization Transfer Expenditure In China

Equalization transfer expenditure is developed from the transition period transfer expenditure in 1995. It is an important institutional arrangement aiming at reducing the local government fiscal capacity gap, achieving inter regional coordinated development and improving the equalization of basic public services. After more than twenty years of development, it has become an important part of general transfer expenditure in our country, the third largest source of transfer expenditure of local government, and also the only form of fiscal transfer expenditure in China, fully in accordance with the general formula of allocation of funds. therefore, The effect of its policy implementation and the rationality of the system design have a crucial role in the entire financial system.Equalization transfer expenditure is essentially the central government's redistribution of income,to achieve fairness and efficiency. The concentrated reflection of efficiency and fairness is the equalization of public services and regional coordinated development.Although the equalization of public services is usually regarded as a category of equity, but public service not only represents the quality of life, also represents the production quality, some areas of the public service level will make the development of the entire national economy affected, in this sense, the equalization of public services will also affect the efficiency and fairness affect the efficiency of the implementation. Efficiency is contribute to the realization of fairness.Therefore, a reasonable and effective equalization transfer expenditure system should be both fairness and efficiency, we should play the role of government financial balance, but also pay attention to the incentive of local finance initiative, to ensure economic operation and financial efficiency. Therefore, evaluation of the effectiveness of equalization transfer expenditure in China, help to explore the design of the system inherent shortcomings and problems, and provide scientific basis for further standardize and improve the balance of the transfer expenditure system, has very important practical significance.In this paper, we first evaluate the effect of equalization transfer expenditure.Inter-regional financial fairness has been regarded as the implementation of residents basic finance fair. Equalization transfer expenditure is the central government, in accordance with the standard "factor method", an objective verification standard revenue and expenditure of local government, and then according to the standard coefficient of balance and transfer expenditures to local governments allocated scale of financial subsidies, financial difficulties region replenished, so as to make the degree of financial inequality between regions is reduced, this also is existing research thought that balance transfer expenditure have narrow transverse financial inequality between the local government of equalization effect, but it is worth noting that this actually not to be able to conclude that the validity of the equalization transfer expenditure system.Measure whether the equalization transfer expenditure have equal wealth effect, the key lies in whether it according to the poor areas to get more and rich areas to get less capital of the reverse regulation of local financial allocation. Secondly, local governments may distort their fiscal behavior after receiving the central government's unconditional, uncoordinated, non-specific equalization transfer expenditures, which may be distorted by the income effects and price effects of the equalization transfer expenditures. mainly for the following two aspects:on the one hand, because the local fiscal pressure decreases, and may create a "fiscal illusion" makes the local government and lower taxes efforts, hope to use a lower marginal cost of transfer expenditure funds instead of marginal cost higher tax revenues at the corresponding level, so as to reduce the enterprise tax burden in this region, local fiscal revenue will be reduced, but at the same time due to the local average rates to reduce the burden of enterprises, so as to attract capital inflows, and can promote local economic growth;on the other hand, increase the disposable financial resources of local government, the increase in public spending, providing more public services, but because of the existence of "flypaper effect" may be the cause of local fiscal expenditure scale and structure change, therefore, should also be considered to evaluate the effectiveness of the equalization transfer expenditure about whether the financial revenue and expenditure of local government behavior have a positive incentive effect. Thirdly, the absence of effective regulatory mechanisms for the use of equalization transfer expenditures by the central government, combined with the local government "X inefficiency", may cause the local government in maintaining their operation and performance of the functions of transfer expenditure funds waste, organization distractions and corruption, and thus reduce the supply of public service efficiency, therefore, also deal with equalization transfer expenditure to evaluate the efficiency of public service supply.Above all, effective equalization transfer expenditure system's running effect to include the following three aspects:first, to ensure that the distribution of funds equalization transfer expenditure has reverse adjust local financial equalization effect;Second, make sure its fiscal revenue and expenditure of local government behavior has a positive incentive effect, not distortion of local government public service supply and tax effort; Third, to ensure the equalization transfer expenditure funds use efficiency, improve the efficiency of public service supply, thus ensuring equalization transfer expenditure of policy effects, to achieve fairness and efficiency.Therefore, based on the in-depth analysis of the status quo of equalization transfer expenditure system of our country, including balanced allocation of funds transfer expenditures and calculation method, the scale and proportion of the current equalization transfer expenditure and the existing problems, to evaluate the effectiveness of equalization transfer expenditure from the above three aspects, the empirical results show that:1. equalization transfer expenditure has the reverse regulation of financial equalization of local government revenue, but because the equalization transfer expenditures accounted for a lower proportion of the fiscal transfer expenditure, resulting in expansion is still unable to reverse the regional financial gap; 2. Our current equalization transfer expenditure system will lead to tax competition between regions, but as long as the competition is sufficient, obeys the law of market economy, in the long run, a balance transfer expenditure base effect and the effect that tax effects cancel each other out, make the balance transfer expenditures to local governments tax effort was not significant, the influence of fiscal revenue of local government behavior shows neutral effect;3.equalization transfer expenditures will cause the local fiscal expenditure "flypaper effect", and the local government to accept the balance transfer expenditures, will increase expenditures, but also will improve the economic service and administrative expenses, but when the financial situation has improved, will tend to increase the proportion of larger the production and the consumption expenditure of the project, this kind of phenomenon in the underdeveloped regions is more apparent..4.The efficiency of the supply of basic public services in China is not optimistic as a whole, although the equalization of funds transfer expenditure allocation efficiency is relatively stable, but promote efficiency in reducing the basic public service condition, our country both in poor areas and rich areas of local governments lack of incentives improve the efficiency of public service supply.In conclusion, this paper argues that:the current equalization transfer expenditures in its system design and policy implementation in a certain extent, balance the fairness and efficiency, the policy effect should be sure, but due to equalization transfer expenditure system is still retained some of the characteristics of the original system, emphasis on local vested interests to a great extent, therefore impedes the development of the validity of the equalization transfer expenditures, make its cannot provide equal public services and regional coordinated development better.Based on the above conclusions, in order to further improve the validity of the balance transfer expenditure system in our country, make use of the funds transfer expenditure to have a more scientific and reasonable, has a positive incentive effect to the financial revenue and expenditure behavior of local government, improve the efficiency of the supply of local public services, achieve coordinated development of public service equalization and regional goals, taking into account fairness and efficiency,we must improve our equalization transfer expenditure system, to straighten out the interests of the relationship between central and local government, so that the government can effectively exercise the allocation of resources and income redistribution, encourage their own development ability of local government,to ensure national macro-control functions.Concrete from the following aspects:first, to further increase the proportion of equalization transfer expenditure, to become the main form of the financial transfer expenditure, give full play to the role of financial equalization and "general formula method" distribution method, to avoid the loss of efficiency of transfer expenditure; secondly, perfect equalization transfer expenditure allocation system, with the local government's per capital standard fiscal balance as the basis of accounting, and accounting in place "standard spending" join "cost variance coefficient of regional spending" to avoid the cost difference in public spending, and between regions in order to improve equalization transfers the scientific nature and feasibility of capital allocation; thirdly, design the incentive mechanism and restriction mechanism in the equalization of the transfer expenditure system, improve the enthusiasm of the local government economic development, the full collection of Finance Income, to ensure the standardization of local government revenue and expenditure behavior, to avoid the local government's moral hazard.In addition, to build a complete and balanced objective and scientific transfer expenditure assessment and supervision system of equalization transfer expenditure funds performance evaluation, improving the efficiency of public service; at the same time, establish a standard of equalization transfer expenditure measures, improve the system of laws and regulations related to the equalization transfer expenditure system. The supervision work to provide a multi-level legal protection for equalization transfer, conducive to the realization of equalization transfer expenditure fairness and transparency in the allocation of funds, to be able to balance between efficiency and fairness, finally realize the coordinated development between regions and equalization of public services.