A Study On Land Finance Of Local Government

The reform of tax distribution system in1994, breaking the traditional pattern ofincome distribution of China’s central government and local government. From then,property rights continue to be gathered to the central government. At the same time,the reform of tax distribution system didn’t change the duty between the centralgovernment and local government. So comes the situation that the central gathersmore financial resources and provides fewer public services. Forced by financialexpenditure pressure, local government turn to look for new extrabudgetary resources.The commodification of housing reform in1998became a new opportunity for localgovernment,and opened a round of urbanization which the land plays as the mostimportant role. And in this process, land transfer, the land-related tax revenue becamea major component of local government revenue. However, this part of land revenuein the short period of time expanded a lot, and local government has become more andmore dependent on this land financial revenue, even more than the general budgetrevenue, this gave rise to a series of social and economic problems.In the current fiscal and taxation system, land finance is a kind of phenomenonthat local government relies on the various taxes and fees, land transfer and financingincome which brought by land. On the one hand, they attract investment by selling theindustrial land with low-cost agreement, and gather more value-added tax, sales taxand other tax revenues by agglomerating of the manufacturing, services and otherindustries. On the other hand, they obtain huge transfer payments by various forms ofland transferring, and obtain land financing rely on the land use rights they had. It isconsidered that in the short term, local government has gathered a lot of financialincome through land finance. However, as a non-renewable resources, land resourceis unsustainable. And the houses built on the land, their property rights are40-70years. Therefore, in the long run, land finance is a short-term behavior which is on thebasis of overdrafting future revenue. In addition, in order to maintain the landfinancial, local governments continue to push up housing prices, and tookuncontrolled land acquisition, brings a major social problems. The high housing price is a heavy economic burden to the public. Excessive land acquisition caused a largenumber of landless peasants which are not very good placement, which affects socialharmony and stability.Around the issue of land finance, the idea of this study is as follows:(1) Make adefinition for land financial,and analyze several forms of land financial, includingland transfer, direct taxation of land, indirect taxation of land and land fees andcharges. Try to present an intuitive impression of land of financial through therelevant data of zhejiang province.(2) Try to analysis the reasons which caused landfinancial, including land system imperfections, fiscal decentralization, and theofficials evaluation mechanism. Identify the root causes from the system.(3)Attempt to verify the relationship between fiscal decentralization and land financethrough measurement model checking.(4) Cite the hazards of the land finance,including overdrafting future financial revenue, the waste of land resources, inducingrent-seeking and corruption, distorting the normal development of real estate,emerging financial risks, and issues of landless peasants.(5) Find a series ofcountermeasures to land finance on the basis of the reasons which cause land financeand variety hazards of it.