Fiscal Power, Tax-Distribution And Fiscal Relationship Between Central And Local Governments

The reform of fiscal system is the main motive power that pushes forward the development of the reform of constitutional system in a constitutional country.Both MAGNA CARTA in 1215 in the United Kingdom and Constitution of the United States of America in 1789 are evidences of constitutional practice in this respect.Tax revenue is an indispensible foundation for any country.According to the basic theory of classical constitutionalism,the power of tax collection is one of the significant patterns of state power which comes from the formal release of all citizens,and can be dated back to the signature of Social Contract. Via the performance of the power of tax collection, parts of people's property rights are transferred to the compulsory tax revenue which is also the "expense" of freedom.The early parliament focused mainly on how to control the government's power of tax collection to avoid the low efficiency and financial waste.After the Second World War, social rights gradually came into the visual field of scholars,and the people's dependence on government was becoming more and more serious,thus,the social role of government and the power to realize the role was acknowledged by the public.The government's financial scale expanded rapidly and public expenses increased sharply,thus,public finance proved to be key issue of a country.In the 1970s,Government Failure was a catchword due to the financial crises and economic stagflation,therefore, Keynesian was out of date as a guidance of western countries.Public Choice Theory and New Institutional Economics began to discuss questions about the significance of exerting restraints on government's financial policies in a constitutional perspective.Human history reveals that, to some degree,almost all the social changes result from the reform of fiscal system,or,from the severe financial crisis and pressure. With the development of politics and economy,there often appears the signals of financial crisis which can develop into economic crisis and eventually end up as constitutional crisis.In our country,financial pressure is also a crucial driving force to promote political changes.Since the establishment of People's Republic of China,the fiscal system of China has experienced several changes on account of changes in the system of collection of tax revenue.In 1994,the reform which is named as Tax-distribution reform aimed to alter the passive situation of central government in the fiscal relationship between central and local governments.However,for a couple of reasons,the reform did not achieve its expected goal,nor did it establish a sound fiscal relationship between central and local governments.And a new reform must be on the agenda of the government for the simple reason that a sound fiscal relationship based on the constitutionalism between central and local governments is what we really need in the present time.Fiscal Federalism,a combination of constitutionalism and economics,will be a possible and realistic method which requires the appropriate decentralization in fiscal system. Generally speaking,Fiscal Federalism is the popular practice in dealing with the fiscal relationship between central and local governments in market economy country.The soul of Fiscal Federalism requires a proper decentralization of public power to address administrative and fiscal affairs between the central and local governments,at the same time,Constitution must be involved in to recognize and preserve the local financial autonomy and to perform Tax Legislative power.