Research On The Fiscal Capacity Of Local Government In China

Since the implementation of the tax-sharing reform in 1994,the fiscal capacity of local governments has been paid more and more attention and discussed by many scholars.However,looking back at the existing relevant literature,we can easily find that many scholars still tend to define the fiscal capacity of local governments as the ability of local governments to raise fiscal revenue within their jurisdiction according to the statutory tax rate and tax base.And take it as the basic basis for determining the intergovernmental fiscal transfer payment standard.Moreover,in application evaluation,the measurement of its strength is more expressed by quantitative indicators such as local government fiscal revenue or per capita fiscal revenue taking into account population factors.Theoretically speaking,the above definition and measurement standards obviously have certain limitations,and it is difficult to touch the essence of public finance,that is,the activities of the government to draw fiscal resources to provide public services to meet public needs.If we only examine the disposable fiscal resources of the local government from the aspect of drawing,then this ability can neither reflect the effectiveness and standardization of drawing fiscal resources of the local government,nor can it reflect the comprehensiveness of the local government in performing its fiscal functions,especially the effectiveness of allocating and utilizing fiscal resources to provide public goods,and whether the financial resources are sustainable or not.On the contrary,it will mislead the local government to pay too much attention to the drawing of fiscal resources and ignore their effective supply and sustainable development.It is not limited to this.It is also obviously deviated from the development direction of China's current round of fiscal and taxation system reform,which is advancing in depth to adapt to the country's governance system and modernization of the country's governance.It does not meet the actual needs of economic and social development in the new era or the internal requirements of the establishment of a moderm fiscal system.Therefore,the connotation and evaluation criteria of local government fiscal capacity need to be expanded and deepened in time to conform to the trend of the times and reform orientation and keep pace with the times.Of course,in recent years,although some scholars have gradually broken through the limitations of previous studies and expanded their connotation definition and evaluation criteria,they still only stay at the level of qualitative analysis and lack a quantitative evaluation index system matching with their connotation,which in turn leads to a lack of detailed empirical research.For this reason,the question before us is how to perfect the connotation of local government's fiscal capacity?How to establish a quantitative evaluation index system more in line with its connotation?What level,track of change and development trend is the fiscal capacity of local governments in China in recent years?What are the differences and convergence of the financial capacity of local governments between provinces?What are the key factors that lead to changes in the fiscal capacity of local governments?and so on.The discussion of these issues is relatively rare in the existing research.Obviously,an effective interpretation and analysis of these problems will not only help us to enhance our macro-understanding of the current situation and basic characteristics of the development of China's local government's fiscal capacity,but also help us to put forward more reasonable policy recommendations based on the empirical research results and in combination with China's actual situation,thus laying a solid foundation for accelerating the upgrading of China's local government's fiscal capacity and earnestly implementing the development direction of the new round of fiscal and taxation system reform.In view of this,this article takes the local government fiscal capacity as the research object.First of all,it reviews and summarizes the relevant concepts and theories involved in this paper by combing the existing domestic and foreign literature to ensure the foundation of the research.In the aspect of connotation determination,this article expands the connotation of local government's fiscal capacity on the basis of existing research,and briefly summarizes its connotation as the comprehensive capability to effectively realize the government's fiscal function objective from the perspective of effectiveness.Its core idea focuses on reflecting the effectiveness of local government in implementing effective fiscal activities to realize its functional objective,and thus determines the basic path to evaluate its fiscal capacity based on the effect of local government's fiscal activities.At the same time,on the basis of the connotation defined in this article,the fiscal comprehensive ability is subdivided into three dimensions of benchmark ability:fiscal absorption capacity,fiscal supply capacity and fiscal sustainable development capacity,which further clarifies the object of this article.Then,on the basis of constructing a quantitative evaluation index system matching its connotation and using the analysis method combining qualitative analysis with quantitative analysis,this paper first conduct a full accounting on the fiscal absorption/supply/sustainable development/comprehensive capacity of local governments in China respectively and analyze the spatial and temporal differences.On this basis,this paper use the measured relevant data,and then scientifically measure and empirically test the regional differences,convergence characteristics and the coupled and coordinated development level of the triple(absorption-supply-sustainable development)fiscal capacity respectively,and deeply explore their temporal evolution rules and spatial differentiation characteristics,so as to reveal the current situation of China's local government fiscal capacity in recent years.After that,this paper also analyzes the key factors that affect the local government's fiscal absorption/supply/sustainable development/comprehensive capacity change and development,and tries to find out the key drivers that lead to their change and development.Finally,on the basis of summarizing and refining the main research conclusions and in combination with the actual situation in China,this paper puts forward relevant policy recommendations.,with a view to providing necessary data support and policy reference for China to deepen and push forward the new round of fiscal and taxation system reform and effectively enhance the fiscal capacity of local governments.This article follows the basic idea of raising,analyzing and solving problems.This article follows the basic thinking of raising,analyzing and solving problems.This paper consists of ten parts:Introduction,theoretical basis(chapter 1),Introduction of evaluation index system construction and calculation methods(chapter 2),Calculation and spatial-temporal characteristics analysis of local government's fiscal capacity(chapter 3),Calculation and result analysis of regional differences in local government's fiscal capacity(chapter 4).,Convergence test and result analysis of local government's fiscal capacity(chapter 5).,Temporal-spatial characteristics and driving force analysis of coupling coordination of local government's triple fiscal capacity(chapter 6),Analysis of the influencing factors of local government's fiscal capacity(chapter 7),Policy suggestions to promote the improvement of local government's fiscal capacity(chapter 8),Research conclusions and research prospects,etc.Through this more in-depth and detailed empirical study,main conclusions as follow:First,the fiscal absorption/supply/sustainable development/comprehensive capacity of local governments have obvious spatial-temporal differentiation characteristics.This paper estimates the fiscal absorption/supply/sustainable development/comprehensive capacity evaluation index of local governments at the national,regional and provincial levels respectively,and analyzes its temporal and spatial characteristics.The results show that:?the fiscal absorption/supply/comprehensive capacity of local governments in the whole country and the three major regions of the eastern,central and western regions are on the whole steadily increasing at the time sequence level,while the sustainable development capacity is on the track of"fluctuation decreasing-rebound increasing--fluctuation decreasing''at the time sequence level.Specifically at the provincial level,except for the obvious decline and slowdown in the fiscal absorption capacity of local governments in some provinces,the rest are consistent with the time sequence evolution laws of the whole country and the three major regions.? From the perspective of spatial distribution,the gap among the three regions is still very wide,with the overall "east high and west low" ladder-like feature,namely,east>middle>west.Specifically,at the provincial level,the gap between the backward western provinces and the developed eastern provinces has not narrowed significantly,but has expanded strongly.Second,the overall spatial difference of the fiscal absorption/supply/sustainable development/comprehensive capacity of local government shows different characteristics,and the main driving factors for the formation of the overall spatial difference all come from regional differences.In this paper,Dagum Gini coefficient and decomposition method are used to scientifically measure the regional differences of local government's fiscal absorption/supply/sustainable development/comprehensive capacity during the observation period,and the regional differences are analyzed from the following four aspects:overall spatial differences,inter-regional differences,regional differences,sources of differences and their contributions.The results show that:? In terms of overall spatial differences.The overall spatial difference of local government's fiscal absorption/supply capacity shows a significant downward trend,while the overall fiscal sustainable development/comprehensive capacity shows an unstable fluctuation trend,and the decrease is not significant enough.?In terms of inter-regional differences.The internal differences among the three major regions of the east,middle and west show different trends.Among them,in the eastern and central regions,except the internal difference of fiscal supply capacity tends to decline obviously,the fiscal absorption/sustainable development/comprehensive capacity tends to fluctuate upward,while the internal difference in the western region tends to decrease obviously with the fiscal absorption/supply capacity,while the other two capacities tend to expand slightly.?In terms of regional differences.The variation trend of the differences among the three major zones is mainly shown as follows:the overall fiscal absorption/supply/sustainable development/comprehensive capacity between the east and the west and between the east and the middle shows an obvious or fluctuating decline process.However,between the central and western regions,only the fiscal absorption/supply capacity tends to decline to a certain extent,while the fiscal sustainable development/comprehensive capacity shows a slight fluctuation and upward trend.?In terms of Sources of differences and their contributions.During the observation period?the fiscal absorption/supply/sustainable development/comprehensive capacity of local governments all show that regional differences contributed the most to the formation of overall spatial differences and plays a leading driving role.Third,the fiscal absorption/supply/sustainable development/comprehensive capacity of local governments have both absolute/3 convergence and conditional ? convergence characteristics at the national level and the three regional levels,but the ? convergence characteristics are different.Through the empirical test on the convergence characteristics of local government's fiscal absorption/supply/sustainable development/comprehensive ability during the observation period,it is found that:?In terms of ? convergence.Fiscal absorption capacity has ? convergence at the national level and in the western region,but not in the eastern and central regions.Fiscal supply capacity ? convergence is not only at the national level but also in the three major regions of the east,central and west.The fiscal sustainable development capacity only tends to converge to a small extent at the national level,but has no ? convergence characteristics in the three major regions of the east,middle and west.The fiscal comprehensive ability is only convergent at the national level,and there is also no ? convergence in the three major regions of the east,middle and west.?In terms of absolutey ? convergence.Fiscal absorption/supply/sustainable development/comprehensive capacity of local governments are absolute ? convergence at the national level and in the three major regions of the east,central and west.?In terms of conditional ? convergence.At the national level,as well as in the three major regions of the east,central and west,the fiscal absorption/supply/sustainable development/comprehensive capacity of local governments also have conditional ?convergence.Fourth,the coordinated development index of the coupling of local government's triple fiscal capacity has shown an overall trend of stabilizing and increasing.The gap between regions has narrowed but is still significant.The internal driving force has a great influence on its change and development,while the external driving force has a weak influence.This paper calculates and empirically tests the coupling coordination and driving force of triple(absorption-supply-sustainable development)fiscal capacity.The results show that:?From the perspective of time series evolution,the triple fiscal capacity coupling coordination index in the three major regions of the country,the eastern,central and western regions and 31 provinces shows a steady and increasing trend,and the coupling coordination level has been upgraded.In addition,the growth rate of most provinces in the central and western regions is significantly faster than that in the eastern regions,and the gap between regions and provinces is obviously narrowing.?From the perspective of spatial distribution,although the spatial pattern changes with the passage of time,the gap between provinces still exists.The provinces with high coordination are mostly concentrated in the eastern developed regions,while the provinces with low coordination are concentrated in the less developed regions in the central and western regions,with the overall distribution characteristic of " high in the east and low in the west".?From the perspective of the driving factors that affect the change of triple fiscal capacity,the national and three regional levels all show that the three internal driving forces of absorption-supply capacity,supply-sustainable development capacity and absorption-sustainable development capacity have significant positive driving effects on the change and occupy a dominant position.The influence of external driving force is weak.Fifth,the fiscal absorption/supply/sustainable development/comprehensive capacity of local government has significant dynamic effects and spatial spillover effects.Other factors such as system,economy and society have certain differences in their effects.In this paper,the dynamic spatial panel model is used to empirically test the influencing factors of fiscal absorption/supply/sustainable development/comprehensive capacity of local governments.The results show that:? The regression coefficients of the first-order lag term and the spatial lag term of the local government's fiscal absorption/supply/sustainable development/comprehensive capacity are significantly positive.It indicates that they all have obvious dynamic effects and spatial spillover effects.?In terms of institutional factors.Income decentralization can promote fiscal absorption/comprehensive capacity,but has no significant effect on fiscal supply/sustainable development capacity.Decentralization of expenditure has an inhibitory effect on fiscal absorption/supply/sustainable development capacity,but has no significant effect on fiscal comprehensive capacity.Government competition has a significant promoting effect on fiscal absorption/sustainable development/comprehensive capacity,but it has a restraining effect on fiscal supply capacity.The interaction of revenue/expenditure decentralization and government competition can promote fiscal absorption/sustainable development/comprehensive capacity,but the interaction of revenue decentralization and government competition can inhibit fiscal supply capacity.?In terms of economic factors,opening to the outside world and investment in fixed assets can promote fiscal absorption/supply/sustainable development/comprehensive capacity.The level of economic development has a promoting effect on fiscal absorption/sustainable development/comprehensive capacity.But it has a inhibiting effect on fiscal supply capacity,and it has a "U" type relationship with fiscal supply capacity,while it has an inverted "U" type relationship with fiscal sustainable development/comprehensive capacity.Residents'consumption level is conducive to the promotion of fiscal supply/comprehensive capacity,but the effect on fiscal absorption/sustainable development capacity is not significant.The change of industrial structure helps to promote the fiscal absorption/supply/comprehensive capacity,but has no significant influence on the fiscal sustainable development capacity.?In terms of social factors.Urbanization rate can promote fiscal absorption/sustainable development capacity but it can inhibit fiscal absorption capacity,and has no significant effect on fiscal comprehensive capacity.Population density has a promoting effect on fiscal absorption capacity,but it has a inhibiting effect on fiscal supply/sustainable development capacity,and has no significant effect on fiscal comprehensive capacity.Finally,based on the conclusion of empirical research and the reality of China,this paper mainly puts forward the following policy recommendations:First,actively promote the reform of the division of financial powers and expenditure responsibilities.Second,improve the local tax system and transfer payment system.Third,accelerate the establishment of a local government debt management system.Fourth,strengthen the construction of supporting measures.