Tax-competition Between Chinese Local Government

The competition is the soul of the market mechanism, it may enable the resources through the competition to obtain the optimized disposition, thus promotes the market economy development. In market economy environment, because of the different economic interest main body has the different benefit orientation, for strives for the income maximization, by other stake artificial match, uses the commercial strategy which can strive for the transaction opportunity, strives for the market the behavior, namely market competition existence.The tax revenue takes the state revenue the main origin, also is the country implements the macroeconomic regulation and control an important economical release lever. Collects the financial revenue through the tax revenue collection, the participation society division of income, may alleviate the assignment unfairly, promotion social justice; through the realization tax revenue preferential policy, supports the social weak trend community, may advance the social progress social stability, promotion harmonious. Therefore, the harmonious tax revenue construction directly relates the construction socialism harmonious society the result. The tax revenue competition belongs to the competition behavior similarly, although has the special manifestation, occurs in the special competition domain, but still follows the similar competition rule.Since the middle and the second half of the 20th century, intergovernmental tax competition has increasingly up graded with international tax competition becoming more and more fierce. It becomes and important content of various country's political economic life day by day. After the foundation of our country, the governments at all levels of our country have formed the independent economic benefits gradually. They are competing with each other. Especially since reform and opening-up, political fraction and financial interest concessions make local financial interests prominent day by day. With the gradual promotion of financial fraction, especially the establishment of the system of tax allocation, there are certain autonomies on the expenditure and heavy freedom right of decision at obtaining income in the local government. A kind of inter-governmental tax revenue competition which is similar to the western federalism country has been produced. How to acknowledge, evaluate and regulate the intergovernmental tax competition in our country has been an urgent problem put forward. This thesis attempts to use the general theories of intergovernmental tax competition to study the intergovernmental tax competition in our country, and put forth some concrete tentative plans to regulate it.The whole thesis is divided into four chapters: the first one introduce the general theories of subnational tax competition, which includes the definition, the theoretical bases. The second one is the introduction of the general theory of tax-competition.The third one states the cause of the tax-competition.The conclusion is that the subnational tax competition in our country is a harmful competition, and the cause lies in the imperfection of tax-divided system, the rigidity of unscientific taxation planning, the fiscal demand exceeding tax capacity and the personal incentive of government official. The final chapter of the thesis puts forward countermeasures to resolve problems the informal sub national tax competition has brought, using the foreign successful experience of tax harmonization for reference and consulting to the necessary conditions fiscal scholars have set to a perfect subnational tax competition, which includes the transformation of government function to set up a administrative system to regulate intergovernmental fiscal relationship; improving the management of taxation planning to make it subordinated to economic tax resource; creating fundamental conditions beneficial to subnational tax competition and so on.