Study Of The Dilemma And Solution Of Central-Local Power Relations Of China From The Tax Revenue-sharing System

The tax-sharing system reform introduced in 1994 laid the foundation the basic tax system and the basic framework of the power relations between central and local government today in China. The core principle of fiscal decentralization is "the unity of fiscal power and executive power".This principle construct the ideal model of decentralization of the governments in china:the division of fiscal power is based on the central and local executive power that should be undertaken. The decentralization of executive power between the central government and local governments is based on the standard of the provision of public goods and public services for the geographical area. However, this ideal model suffered a setback in practice.After the reform of the tax system, the central government has been unprecedently strengthened, but the local governments have been in a corner. We can call this situation as "the upside down of the fiscal power and the executive power". There are two main solutions to solve this dilemma.The first solution is that the local governments should be given more fiscal power. The second idea stresses the need to strengthen the transfer payment system. But these two ideas have not taken into account the complex relationship among the fiscal power, the executive power and the personnel power.Actually, the division of executive powers is linked to the nature of the executive power and the Self-serving of the officials in China. The promotion of officials depends upon the growth of GDP and the tax revenue growth. The expression of diverse interests of the people's can not be effective responded. This is a kind of functional lack in system designing. This is the root cause that the power between the central government and the local government can not be divided reasonably. This article will set the tax system as the starting point of the argumentation. And then I will use the basic contradiction of the process of modernization as the basic framework of division of executive power, which is between the marketization and social protection. I will compare the actual division of executive power with the ideal mode. It is very natural for us to discover the deep reason of "the upside down of the fiscal power and the executive power".The real reason is that the promotion of officials is as same as the mode of tournament.At last, I will try to build the decentralization programs of the central and local governments which is consistent with the situation in China.