On Intergovernmental Transfer System Under Provincial Level

Inter-governmental transfer payment system is an important part of tax-sharing financial management system. Since 1994, with the deepening of the reform of the fiscal system, intergovernmental transfer payment system has been established and is improving gradually, the scale is expanding year by year. The development of intergovernmental transfer has effectively promoted the dynamic optimization of fiscal system, the implementation of national macroeconomic policies, and the healthy and rapid development of economy and society.The current China's inter-governmental transfer payment system is still immature, particularly in resolving the vertical and horizontal financial imbalance, in promoting equalization of basic public services and achieving harmonious development between regions. The 17th party congress report proposed the reform goal "to establish the fiscal system matching the financial power and resources", and MOF has also plan to establish a standardized, open and transparent transfer payment system, which as an important part of financial reform in the future. This paper is based on the current situation of reform, through the in-depth empirical analysis of Shandong Provincial intergovernmental transfer payment system, in order to provide valuable theoretical and policy recommendations to the following reform of public finances.This paper is divided into five parts, partâ… majors on the background to the ideas of meaning and research methods. Partâ…¡focuses on the economic basis of intergovernmental transfer payments, such as public demand theory, the theory of intergovernmental fiscal relations, and intergovernmental principal-agent theory. Partâ…¢introduces the China's current reform of intergovernmental transfers, to provide the basic framework of overall policy.Partâ…£studies on the Shandong Provincial transfer payment system reform, covering the contents of the transfer payment system reform, structure & scale of all kinds of transfer payments, while a systematic analysis of the current revenue imbalance at all levels in Shandong Province and regional imbalances, points out the necessity to further improve of the transfer payment system. Part V gives policies and measurements to reform of inter-governmental transfer payment in the prospective of the equalization of the basic public services in coming period.