An Empirical Analysis Of Practice Of Legal System Of Tax Distribution In China

Since1994, China has adjusted financial management system of tax distribution.Practices in the past ten-plus years show that tax distribution system meets therequirement of new system of market economy, and adapts to the conditions of ourcountry. Tax distribution system Improvement of central government financial status,enhances the local government’s macro-control capability, regulates the fiscaldistribution among regions, mobilizes the enthusiasm of both central and localauthorities, and lays foundation for a modernized public financial managementsystem.Tax distribution system has performed well generally in the past ten-plus years,but we must notice that its financial system still contains vested interest formed by oldsystem. This is a transitional institutional arrangement. China’s tax distribution systemstill has room for exploration and reform. This thesis, taking Hunan province assample, makes use of empirical study as the general method. It showing the status offinancial income and outcome of Hunan province, county financial system reformdirectly under the supervision of provincial governments and debt of localgovernments. Among them, budgetary overall absolute financial revenue of Hunanlocal governments’ increases with each passing year, so does its share of GDP. Theshare of tax income for central government to budget in overall financial incomereaches45%per year. Hunan province becomes increasingly reliant on finance ofcentral government whose subsidy takes up nearly60%of overall income in realterms of local income. Hunan province lacks overall local tax, taking up only aquarter of local budgetary finance. At the end of2010, governmental outstanding debtof Hunan province was more doubled than overall financial income of the wholeprovince that year, taking a quarter of the GDP. Then, this thesis summarizes andgeneralizes legal problems in Hunan tax distribution system in terms of its local taxsystem, taxation power authorizing, financial transfer payment and localgovernmental debt. At last, in view of the existing problems, it proposes to establish areasonable local taxation system, divide taxation legislative power, delegate properlytaxation management power, accelerate legal construction of financial transferpayment，enhance governmental debt management, and provide a legal guarantee todefuse and prevent financial risk and other countermeasures to improve China’s taxdistribution legal system in a scientific way.