Jiangsu Province, Following The Government's Fiscal Transfer Payment System Research

The inter-governmental transfer system is a significant part of fiscal system. It is a key means to regulate the fiscal revenue and expenditure between governments of different levels and to reduce regional economic gaps. Its main goal is to achieve the equalization of public services. In the world, main countries with market economy system adopt this means to deal with vertical and horizontal fiscal disequilibrium. Since our country carried out the sharing-tax fiscal system in 1994, we had implemented transitional fiscal transfer system, applying factor-method to project the grant of fiscal transfer system. Most of the provinces in our country have been making a similar reform try on the basis of transitional transfer system of central government. It proved to be helpful. Since 1996, our province began to calculate the amounts of distribution to difficult counties in line with the rule of transfer, instead of the previous way. After endeavor of several years, we have gradually set up a comparatively normative regulation. Nevertheless, there are somewhat questions in our operation because of the limitation of objective conditions. According to the theory of market economics, the establishment of fiscal transfer system must conform to some principals, including the principal of scientific and rational, the principal of normative and uniform, the principal of efficient preferably, the principal of equitable concurrently, the principal of public and transparent, and the principal of paying more attention to performance. The design of fiscal transfer system of Jiangsu province should comply with periodic goals. We also should calculate the standard for fiscal revenue per capital and fiscal expenditure for all regions in the method of factor and regression, and then decide rationally the fiscal capacity of different regions. We should ensure that citizens in different areas could enjoy equalized public service relatively and hold fiscal capacity accordingly. Meanwhile, we should take policies and measures comparable to goals that have been set previously. Only by doing these can we gradually establish a specific fiscal transfer system that is accordance with the characteristic of Jiangsu.