Study On The Income Distribution Effect Of Public Finance Expenditure

Since reform and opening up, along with China's rapid economic development,China's distribution of income among residents has became a growing gap, which posed a serious threat for the building of a harmonious society in China. Expenditure of public finances means the sum of all costs that the government has used in order to perform its functions. It has the broad and narrow points, the broad public financial expenditure includes not only the narrow sense that the government departments has spent, but increased private sector expenditure arising from government policies and regulations. In this paper, the study of public financial expenditure refers the narrow sense of public finance expenditures from in the Statistical Yearbook.Public finance expenditures have the functions of the allocation of resources, promoting economic growth and regulation of income distribution. At present, China's income distribution gap has not been eased, but has gradually expanded with the deterioration trend. According to Musgrave's growing theory of public finance expenditures, China's economy has entered a mature stage, the structure of public expenditures need to be changed from investing in infrastructure-based expenditures to education, health and social welfare-oriented gradually. Therefore, the study on current income distribution effects of public finances expenditure is significant.This article refers to the theory of relationship between the public financial expenditure and income distribution and institutional analyzed the income distribution effects of public finance expenditure, Through the establishment of VAR econometric models, empirically test the relationship of public financial expenditure and income distribution, according to empirical test results, analyzed poor performance and characteristics of the income distribution effects of public finance expenditure, further find out the reasons for it, in accordance with the status, the characteristics and causes of the question of, put forword to income distribution policy recommendations.Through the analysis of this article, public finances expenditure in the years of 1978-2007 exert a negative income distribution effect on the residents, reasons there are: (1)because the public financial expenditure has been focusing only on the functions of economic growth since reform and opening up, public financial expenditure refers to economic construction as the center with the implementation of the fiscal policy that "giving priority to efficiency with due consideration to fairness", society has the expense of the majority of people to seek the benefits of rapid economic development; (2)income distribution of public finance expenditure with disorder level and disorder authority; power and property rights of Central and local governments at all levels doesn't match, resulting in difficult for local governments to achieve financial resources to regulate the power for the purpose of income distribution that the central government has authorized, local governments provide inadequate basic public services. (3) income distribution of public finance expenditures with imbalance structure and inadequate ability; Public finance expenditure use small proportion in the income distribution, it is difficult to achieve the protection of social equity; (4) income distribution of public finance expenditures with public lost functions and limited effect. Income distribution of Public financial expenditure are imperfect on some of the features, resulting in public financial expenditure to adjust the income distribution under the pretext that to seek benefits for some groups as the real results. At the same time, the public financial expenditure has certain limitations and just can play a limited function. the income distribution is due to the historical conditions and the reality.Given the above reasons, the public financial expenditure has poor income distribution effects. Combined with China's current reality, this article thinks about some aspects to improve the public financial expenditure system and to implement the function of rational adjustment of income distribution. (1)To establish the concept of public finance; To establish the concept of public finances. Public finances are financial institutions to provide the community with a public service, to promote orderly development of the market, the rational allocation of resources and promote social equity; (2)to match property and power between the central and local governments; so that the public financial expenditure play the role of income distribution with abundance capacity and balance level; (3)to adjust the size and structure of public finances expenditure; To increase adequate public revenue, to expand the size of public financial expenditure, improve the proportion of public financial expenditure for the promotion of social justice; The biggest problem in China is the "Three Rural Issues", to address the "three rural" issue, that is to promote social harmony and equity between urban and rural areas. Government promotes the equal income distribution between urban and rural residents in many ways, such as by increasing financial input in agriculture and tax subsidies, increasing employment in peasant farmers and workers, increasing expenditure in the supply of basic public services in rural areas. (4) to co-ordinate urban and rural development; (5) continually to improve the equalization mechanism for regional economic and social development. To improve income distribution mechanism should be took into account as soon as possible, to attach great importance to the income distribution gap among people continuing to expand in different regions, continue to improve the equal regional economic and social development mechanism.