The Research On Problems On Deficit And Liability For Villages And Towns In China

In recent years, the problems on deficit and excessive liabilities for villages and towns have restrained the Chinese agricultural economy from developing. And thereby it isn't only a financial affair, but influences on the construction of grass roots, and also seriously threatens the safety of our nation. Therefore how to resolve the problem is an important mission to us at the present time.1. The conception of fiscal deficit and liabilities.First, financial deficit and liabilitiesOn the research of fiscal deficit, the financial deficit is formally classified as public deficit and latent deficit. The capital scarcity is formed by financial expenditure exceeding income, and the gap is always made up by currency. In the history of economic development there are three methods to compensate the financial deficit, and they are to use budget surplus of the former years, to borrow money (including foreign loans and internal debt) and to get overdraft from banks.Secondly, the conception of deficit and liabilities for villages and townsThe deficit and liabilities of villages and towns is the capital scarcity, which is the result from financial expenditure beyondrevenue in the report of final accounting. In the practice of account that is manifest as the red figure. There are explicit loans and implicit loans including to the liabilities of villages and towns. And the explicit loans consist of bank deposit, fund for agricultural development, other funds for debt and the loans of social pool; the implicit loans consist of the salary owing to the employee, the official expenses, the postage due of capital construction, the liabilities for financial hypothecation and other loans.2. The status and endangerment of the deficit and liabilities for town financeAccording to some information, it is stated that the villages handing in their revenue is 42 percent of whole 45,000 villages, the villages expending money upon their own income is 6 percent and the villages requiring the subsidy from superior government is 52 percent in 1999. In 2000,the general expenditure of villages is 89 percent of whole domestic expenditure and the construction expenditure of villages is 11 percent. And the rich villages centralize the developed eastern region along the seacoast which can provide for the public utility, otherwise some the mid-west villages just maintain the level of dressing warmly and eating his fill, and even some villages can't achieve this goal rather than provide the fund for the public utility. As a result it is obvious to owe liabilities todevelopment of village service in our country, till the end of 2000 the country villages have already owed 200 billion debt.The village obligation scale is still large, and in some counties the condition of the excessive liabilities in villages is much worsened. On one hand the financial budget can't afford to the fiscal mandatory expenditure, so that the villages have to borrow money once again, accordingly the bad prestige makes the cost of obligation increased; on the other hand the old liabilities can't pay off on time, the interest piles up continuously and parts of interest is compelled to turn into the principal, therefore the "snow ball" rolls more and more big, at last sink into the vicious cycle.The deficit and liabilities causes great damage to the town finance. In the first place it tampers with the operation of the root-grass government, and increases the risk of the whole finance. Because of the town financial hardship and the accumulation of the liabilities, the local authority has to be on the horns of a dilemma, and the function of social security and public service can not be performed, in consequence it is difficult to meet the demand of public service to country so that confines the development of local economy. Secondly the magnitude of the deficit and liabilities will aggravate the burden of the farmers, and it will handicap the progress of the reformation of the town tax and fee. Thirdly the excessive burden ofthe farmers impacts the relationship...