Constructing The Operating Mechanism Of Public Finance

As the economy system transform from the traditonally highly-planned economy to the market-based economy, the fiscal system change form the "producing and building" type to the "public finance" type, which is based on the market-based economy. The transformation of the finance is due to the change of the economy system.Although the public finance model was put forward in December,1998, many reform measures that had been enforced since 1978 were leading to the public finance: tax became the only basic revenue form, the investment in the state-owned enterprises was confined to the bigger ones and the smaller ones were excluded, which made the investment range contract, the government raised the investment in the public goods such as fundamental facilities and improved the economic environment, the fiscal budget is reformed to make it effective, the active fiscal policy was enforced so as to strengthened the macro-adjustment function of the public finance, etc. These reforms gradually bring about some characters such as remedying the market in function, service all, non-profitable and legislative, and all these are needed for the public finance system.The public finance originated in the Europe and the America. It came into being as it denying the feudal family finance. The public finance confined the function range of the government by the principle of market function. And its character is publicity. The public finance system has functions as allocating resources, distributing incomes and stabilizing the economy. The essence of the system is a kind of economic action of the state or the government, the same as the one of family finance and state finance.In 1994, China initially built up the revenue operating mechanism by thetax reform. The existence of overrun-fee made the mechanism not work properly and we can not judge the function range of the government and the ability of getting the revenue of the government. There are many questions in the field of the fiscal expenditure. On one hand, the total amount of fiscal expenditure increased gradually. On the other hand, the ration of the expenditure to the gross domestic product decreased. The expenditure structure is unreasonable. The expenditure differ greatly among different areas. The management of expenditure is needed to be improved. And there are some questions in the field of budget form, budget contents, compiling methods and the budget supervision.The public finance belongs to the economics in essence, but it includes some contents of politics. To build up the public finance model, we must begin with the reality of the country and gradually accelerate and strengthen the constructing of political decoration and legislation and constitutions of public sectors and propose the spirits of the public finance.To build up the operating mechanism of the public finance, we can start with the budget management by completing the laws and rules, assuring the time to compile and to function, completing the items system, enforcing department budget which can include the capital that was ever excluded to the budget system, strengthening the budget legally and making it effective which it should do. The emphasis of building up the public finance operating mechanism at the present is to optimize the fiscal expenditure structure. Changing government functions, contracting the expenditure range, taking a reform on government organization, controlling the expansion of administrative personnel and funds, providing more public goods and strengthening investment on the important industries and fields are the outlet to optimizing the fiscal expenditure structure. Moreover, we can improve the fiscal revenue mechanism by deepening the fee-tax reform further and completing the tax system.