On The Function Of The Government And The Establishment Of Public Finance System

With the deepening reform of our market economic system, the reform of fiscal system has been carrying out. We take the public finance as the aim of our fiscal reform after having explored for more than 20 years. However, it is the hot matter that finance circle discusses why and how to set up the framework of fiscal system now. This article analyzes the theoretic base of establishment of the public finance according to the change of government's function, and puts forward the framework for establishing our public finance.The discussion of modern government's function arises from the 1930s,and the discussion focuses on the issue that how the government can make up the market failure so that it can promote the economy development. As a result, the issue of governmental function, in essence, is the question of government economic function and the change of governmental function is the conversion of the government economic function. The modern market economy is the mixed economy, which needs the government interference. We will set up perfect market economy that the government must play a proactive role. Our government's function must be changed with the conversion of economy system from planed economy to market economy. Finance is the administration that the government uses the revenue, which is the representative of the government economic function in practice. Through the analyses of the relation between evolvement process of governmental function and fiscal system after the foundation of the People's Republic of China, we can assert that the government's function is the decisive factor for fiscal system mode. And fiscal system should be changed with the conversion of government's function. The public finance is the finance that fits the market economic system.