The Plight Of The Local Financial And Countermeasures

The system of tax allocation reform of 1994 has greatly improved the financial relation between central authorities and local government and strengthend the national ability for macroscopical regulation and control by means of raising the central fiscal revenues in proportion in the general financial revenue. As a result, the efficiency factors released by the enormous reform have already become important impetus of promoting China's whole market-based reform. However, there is no denying that local government, since the reform of the system of tax allocation, have been confronted with financial difficulties that fiscal expenditure almost failed to make ends meet. Especially the thorny problems of public goods supply and organization operation in county township levels under the straitened circumstances,, have already caused the extensive concerns of political and educational circles.Now local governments have established the finance management systems according to tax allocation principle as well as the native actual circumstances.But so far the reasonable and healthy financial system below the province level has not been established yet, which has adverse effect on the function of existing system. Communist Party's 17th Annual Congress has raised further macro-economic development target that we should steadily carry out reform of the taxation system and improve the financial system below the province level so as to strengthen the ability to provide public service. We believe the problem should be studied under the macrosoft environment of economic systems and operational mechanisms transiton in China at present. We can say, it is exactly advancing gradualism of the system reform and the "route rely" of institutional changes which lead to the incompleteness of tax allocation reform, on the contrary of the requirements to establish normative and efficient system of tax allocation. In conclusion, it is the system defect for the present difficulties of basic finance.The foreign practice has provided beneficial reference for us in this respect. The United States, Japan and France, despite of differences in own fraction type decentralization of authority as well as financial system arrangement, have followed some principles with universality: Dividing the duties and responsibilities rationally, budgeting in accordance with expenditure, the independent subject tax categories at all levels, the financial transfer payment system of "melting equally" among the places and so on.Combining the foreign advanced experience and the concrete national conditions of our country, this text aims to seek resolutions to the basic financial difficulties. Firstly, revitalize the intergovernmental tax right according to the principle that "the duties and responsibilities conform to ownership of property", put forward the subject tax category of establishing the local tax at county level, perfect the system of the local tax, reducing such methods as the financial level ,etc. Then streamline and improve the systems of tax revenue return, subsidy for special purpose and transfer payment in transition period in aspect of basic goal and measure of transfer payment, etc. in an attempt to overcome the local financial difficulties.