A Study On Regional Tax Transfer In China And Its Solution

Since the reform and opening, China has tried for several years in the field of fiscal decentralization. China has got sound effect of operation in the reforming of tax distribution system which founded in 1994. A growing problem of horizontal transfer intensifies imbalance of regional economic development, while the implementation of fiscal decentralization. Through the statistical result of data over 2000-2008 periods, we found there exists significant deviation of income and source of tax in China these years, and the situation gets increasingly serious, but the transfer payment from central government doesn't help alleviating the deviation.The two-tier study is unfolded from macro-influencing factors to micro-realization mechanisms. On the macro-influencing factors level, the empirical test is conducted for the influencing factors of regional tax transfer, using univariate analysis and multiple regression analysis, based on a sample of 31 regions over 2000-2008 periods. I found that several factors affect the regional tax transfer, there are macro-tax rate, industrial structure, endowment of resources, proportion of state-owned business and imports and exports. On the micro-realization mechanisms level, I discuss the influence of related transaction on regional tax transfer, using case method, and make a calculation. I found that major shareholder would transfer the benefits between related parties, using related transaction, and retain the profit in the divisions or regions that have low tax rate, for the tax planning.On the basis of the comparison of tax and distribution system in United States and Switzerland, the paper gives the path of solution which is suitable for China's national conditions.