The Study On The Relations Of Financial And Administrative Power Between The Central And Local Government

In the literature of public fiscal theories in the West, the scholars have proved the necessity of government hierarchy and the separation of fiscal power through the governmental function theory and the features of hierarchy and space for public goods. The separation of fiscal power between the Center and local government is put forward to facilitate the public supply of different levers by different governments. Thus, forming a core issue of the Financial System—the problem of division of financial and administrative power between the Central and local government. The implementation of revenue sharing system in China in 1994 is a landmark of the fiscal reform with the establishment of fiscal framework of revenue sharing and hierarchy. However, the characteristics of the old system remain in the new revenue sharing system and the relation between the central and local responsibility is almost not brought into, which is an expedience. The increasing financial difficulty has affected negatively the economic functions of local governments, unless the trend is curbed, the financial difficulties of local governments may eventually reduce the state revenue, and further hinder the national economic growth and undermine the regime. So, the research of the financial and administrative power relations between governments has become a significant subject of finance and government economics either in theory or for practice.This paper, first, discusses the market economic system, public finance theory, theory of public goods, western financial decentralization theory. On the basis of these, it researches the relations of financial and administrative power between the central and local government. Through analyzing the historical track, reasons for change, characteristics and status of the relations of financial and administrative power, it studies the current problems deeply. Its main performance is following: Firstly, the administrative power division of the government and the market, at all levels of government administrative power is not clear and has a tendency of transferring downward gradually. Secondly, because of the non-standardized way of revenue division, tax rights of excessive concentration and lack of stable rules and so on, the financial power division has a tendency of transferring upward gradually. Thirdly, transfer payments goal is not clear, forms are non-standardized and the structure is not reasonable. Finally, there are excessive levels of government with weak financial supervision. On the basis of this, with comparison and analysis, it chooses mainly four different models of financial and administrative power, such as the United States, Germany, France and Japan—the decentralized, focused, appropriately decentralized models and receives many useful suggestions from these.Learning the advanced experience from abroad and considering China's specific conditions, it gives the advices on the framework of revenue sharing system. Firstly, according to the basis theory for the public, it redefines the functions of government. Secondly, a reasonable administrative power division between the central and local government according to the hierarchy of public goods and the division level of government functions. Thirdly, a reasonable financial power division according to the principle of the compatible of financial and administrative power, while cleaning up and standardizing departmental financial and administrative power and expanding the scope of the Budget Management. Fourthly, standardizing and perfecting the tax return, special subsidies, the transfer payment of transition period from the basic objectives, measures of transfer payments. Finally, it promotes the reasonable division of the financial and administrative power between the Central and local government by optimizing the level of government finance.