Market Economy And The Reform Of China's Budget Law

The budget law of PRC is the core of its finance law. The first budget law of PRC had been carried out for nearly ten years up to now, which was passed by the second conference of the eighth NPC and took into effect from Jan 1,1995. During this decade, the important reform was introduced into the China's finance system, the traditional budget system exposed many problems which restricted seriously the establishment of the fame of the public finance system of the Socialist market economy. The NPC and the State Council made a big decision to reform the management system of the Government budget, following the new tax system established by reform of "division tax "system, the reform of the budget system had resulted in a good and obvious effects, and at the same time, some problems also existed in the reform. The budget system reform is a "revolution" opposite to the traditional budget management system. Currently, the China's budget system reform is on a "hard" stage and still has long way to go.The following analysed the problems existed in 'budget law' of 1994 and some problems in the budget system reform, and put forward initial ideas to modify and improve the budget system to establish a new budget system of the public finance system which fit the market economy The following covers four sections apart from preface, conclusion and postscript.Section l,the importance of the budget law to modern country. This part start from introduction of modern budget system to elaborate the meaning of the modern budget system, the relations with market economy public finance and the characters and position. Section 2,the basic situation that the budget law was carried out and active roles that the budget law played This part elaborates that the 'budget law' of 1994 is a first basic law issued in aspect of the finance budget management since the founding of the PRC The implement of the budget law provided a guarantee for the increase and reasonable allocate of national financial resources in past ten years, is also a guarantee of the economy and even the society stability. This part insists that the positive roles of implement of the budge law in practice are as follows,1. The consciousness that the government do budget by law had been enhancedconstantly2. Played a active role in strengthening the national macro adjust and control and promoting healthy development in economy and society.3. The government budget system is being improved gradually as per the requirement of the market economy.4. The binding force of the budget law is being strengthened gradually.5. The serious implement of the budget law improved the budge management level in financial sectors.Section 3, the problems existed in the course of implement of the budget law. This part elaborates the various problems existed in the course of implement of the budget law in term of the authorized strength of the budget, the implement of the budget, and the supervise of the budget.This part insists, the first .the problems exists in the authorized strength of the budget are as follows,(l)the content of the authorized budget strength is not complete, (2)didn't establish the real reply budget in aspect of the budget strength form, (3) the problem about the budget strength time, (4)the budget strength lacks the prospect, (5)the margin problem between the plait budget caused by multiple layers and actual budget, (6) the budget strength content is not scientific enough, (7)the budget strength power corpus is not clear and definite.The second, the problems exists in the budget examination and approval covers,(l) the problems in the budget initial investigation include the time for the budget initial examination is short and the content of the initial examination is not clear, (2) the budget examination and approval in our country seems a formality The time for the NPC to examine and approve the government budget draft only covers one month during this month a initial examination is carried out before the opening of the NPC and the period of the NPC, so it is too short to carry out a real examination, (3)the budget examination and approval procedure is not clear and the way is not reasonable, (4)the budget examination and approval power scope is not clear, (5)the law result and duties are not clear after vetoing a budget.The third, the problems that exists in the course of implement the budget(l)the provisions that adjusts budget are not clear, include the concept that adjust budget is obscure and the conditions to adjust budget are not clear and the procedures to examineand approve budge need to be improved, (2) the problems that big random are in implement of the budge, include the transparent is low in course of implement budge so cause the budget sectors operate behind and need more public supervision, this is a blank of law in implement budget, (3)the budget implement lack the mutual restrict mechanism the financial section gathers the budget strength, implement and supervision in whole body, this causes a lack of the mutual restrict mechanism, (4)the problem of the financial reserves. The budget allotment power are exercised by a few sections not only destroy the budgetary completeness but also makes budget lose control easily.The fourth, the problems in the budget and final accounts, (l)the supervision of NPC is a form, (2)the supervision of NPC are in two lines, dislocated, (3) lack the daily supervision and also the key for NPC's supervision are not clear, (4)actually, there are not supervisions against the budget implement in village classes, (5)the examination and supervision against the final accounts are not available, (6)the supervisions are not strong ,the punishment are not strict.The fifth, the problems in other aspects: (l)the problem that local government issue the creditor's rights. Currently, there's bigger argument about whether the central government allow the local government issue creditor's rights or not. From theory, the local government can issue the creditor's rights as long as the local government formulate relative regulations and establish relative restrict and supervision mechanism. But, the problem is how to resolve the debts of the local government? Because it's very difficult to know how many debts that the local government are bearing now. Besides, how to make sure that the local government will not issue debts again against regulations after permission granted? Once the permission granted, probably, the local government will pay the unreasonable debts with legal creditor's incomes. (2)the coordinational problem between the budget law and other laws, such as the inconsistent problem between the budget law and constitution and the inconsistent problem between the budget law and audit lawSection 4, the reform and improvement of the budget law. This part elaborates the background and basic situation of the budget law reform, and analyses the existing problems and the necessary and importance to further reform, and the basic ideas to further reform and finally put forward the basic ideas to improve the budget law. This part insists, no matter how to reform, the major purpose for the reform is to match thesocialist market economy. The object of the reform is to establish the public financial system which matches the market economic system, and makes the budget much more fair, open transparent and complete. It will improve the budget law from the following four aspects.1. The improvement of the budget strength system. It includes (l)to keep the completeness of the budget strength contents, (2)to implement the reply budget thoroughly as per the budget law, (3)to advance the time of the government budget strength, (4)to solve the inconsistent problem between the budget financial year and the date for the law-making organization to examine and approve, (5)to introduce the financial middle and long-term plan and strength the rolling budget, (6)to establish the single budget strength organization, (7)to further reform section budget. This part insists that the budget allotment power of other sections are supposed to be canceled accept the financial section. The zero-based budget is supposed to be promoted during the transform period. But when the transform period ends, the " cardinal number method" should be adopted due to the huge costs caused by the zero-based budget. Once possible, the financial expenditure results evaluation mechanism should be established as soon as possible and detail the section budget.2. The improvement of the budget examination and approval system. It includes(l)due to the wide work scope of the NPC financial committee , accept the budget examination and approval , it still has a lot of work to do , and because of the complexity and speciality of the budget examination and approval, a budget examination and approval committee participated in by experts and scholars are suggested to be established in all levels of the NPC to carry out a initial examination on the government budget drafts and helps all levels of the NPC to examine the budget and adjust budget and final accounts, (2) the time for NPC to examine and approve budget is prolonged to six months, this makes sure the NPC will have enough time to really examine and approve the drafts submitted by government, (3)to establish the item examination and approval system ,and open widely the budget examination and approval scope, this will facilitate the NPC to play its supervisions rights, (4) the budget law is supposed to stipulate the remedial measures and law duties in case of need, (5) to complete the procedures of NPC budget examination and approval, and practice the budget examination and approval "third reading" system.3. To perfect the budget implemental system. This includes(l)to increase the transparency of the government budget implement, (2)to strengthen the regulations of the budget adjustment, (3)to unify the budget implement power in financial section and promote government purchase system and return the national treasury management system in Ministry of Finance.4. To perfect the budget supervision system. This includes (1) the budget law should detail the contents of the NPC supervisions and further make the duties scope ,work contents, procedures and of NPC more clear, and make the strong provision in strict operability to the budget examination and approval, and strengthen the real results of its supervisions, (2)to establish tight supervision mechanism, (3)to strengthen the final accounts reviewing supervisions, (4)to establish the usual inspect system of the budget implement, (5)to strengthen the budget implement supervision in village class, (6)to practice the budget report and announcement system and increase the transparency, (7)to perfect the budget law duty system, guarantee the authority of the budget examination and approval supervision5. The local government issue the creditor's rights to say from the economy , the local government ,which has finance, as one class authority, has right to bear debts , while accepting the roughly premise in central coordination system. Changing the provision that doesn't allow the local government to issue the creditor's rights , this will facilitate to reduce the risk that the local government bring due to bear debts for the local government to break the regulations . can practice in the province class first, and accept the central macro view stipulation at the same time.6. To coordinate the relations between the budget law and other laws, regard the budget law as the fundamental law, and handle and coordinate the conflicting clauses Accept the budget law, there shouldn't are much more clauses which stipulate the financial expenditure in other laws, avoid the budget law conflicting with other laws, and keep the authority of the budget law.