Fiscal Decentralization And The Per Capita Transfer Payment Effect On Non-economic Public Goods Supply

According to China’s12th "Five-Year Plan ", an important part of future work is to accelerate the construction which is focus on improving people’s livelihood and social condition. Whether to effectively provide public goods directly determine this construction can carry on smoothly. On the supply of public goods issue, fiscal decentralization is one of the most important existing theories. In China, it’s mainly reflected in the tax system reform between the central and local government. The partition of property rights and no restructure of the power causes the most of the expenditure responsibilities vested in local governments, and due to the income and expenditure does not match, it’s spending on science, education and other public goods has been repeatedly compression. The result of this reality is the lack supply of public goods. This paper attempts to explore the actual impact that the transfer payment and fiscal decentralization influence the supply of local public goods from the empirical view, and further the analysis to different regions.The empirical studies have shown the direction and the extent of this impact, and results confirm the central and western regions show larger reaction to transfer payments and fiscal decentralization indicator, compared to the east and northeast regions, the latter two regions, especially the eastern region for the reaction of the two indicators are the smallest. The reality is consistent with the results that eastern regional governments have capacity to independently determine the supply of public goods. The per capita transfer payments of central region significantly less than the western region is a result of the preferential policies, but relative still lower than eastern region shows the policy-oriented value.This article is organized as follows. Proposed to study the problem in the first chapter; the second is the literature review chapter related to the topic of this article; given in third chapter, there is the mathematical model of the Pareto optimal under transfer payment conditions for the local government; the fourth chapter is the empirical test of regional fiscal decentralization and transfer payments for non-economic public goods supply; last in Chapter5of the corresponding policy recommendations.