The Study Of The Legal Mechanism Of Local Government Debt To Guard Against And Dissolve Problems

Since the financial system reform in1994, many local governments are facing increasing financial difficulties, the contradiction between financial revenue and expenditure in grassroots government is rather fierce. At the same time, China implemented, macroeconomic control policy and a series of tax reform after the financial crisis in2008, which leads to a certain amount of local fiscal revenue. With the economic development and rising requirements of public products, making it difficult for limited revenue to pay for the massive fiscal spending. Then the local governments begin to raise money through investment and financing platform. The scale of debt is expanding quickly, and at the same time the risk of the local government debts also gradually expanding with the balances accumulate. Because of the regulation of the local government debt exists lots of flaws and many hidden debts outside of the supervision, which brings much more risks for the local government. The debt must be into the legal track to guard against and dissolve the local government debt problems. We can try to perfect legal mechanism, and bring the debt into the framework of legal, which ensures the debt can give full play to its "double-edged sword" in a positive way.This essay is divided into six parts:The first section is introduction. It expounded the research of background and meaning, objectives, research methods and scope, and the frame of research.The second section is the rational understanding of local government debt problem, which provides a description of the existing problems of local governments’debts, analyzes the potential harms and causes. First of all, the existing problems of debt are debt behavior is not standardized, the proportion of hidden debts is high, the regulation is poor, the rate of overdue debt is high, the government credit is poor, the risk of debt is accumulated. Secondly, is the analysis of harms of the problem. The deterioration of debt will contribute to the performance engineering and corruption, damage the ruling ability and credit of local governments, increase the burden of taxpayers, trigger social unrest, lead to the fiscal risk and financial risk. Finally, the causes of the problem are analyzed from three aspects like system, policy and law. The system performances for the incompleteness of tax system reform, the unscientific of the system of investment and financing, the lag of the administrative management system. The reason of policy is characterized by macroeconomic policy, the policy of tax cuts, regulation of real estate, and the policy of land. The law performances for the lack of relevant legal mechanism.The third section analyzes the necessity of legal mechanism construction from three aspects like politic, law and practice. From the aspect of politic, the realization of democracy requires the rule of law, and needs the law to ensure political stability by eliminating instability. From the aspect of law, the law’s mandatory, authority and universality can make up the inadequacy of other prevention methods and promote the local fiscal runs well. From the aspect of practice, the construction of relevant legal mechanism can control the expanding of debt, reduce the pressure of local fiscal, improve people’s livelihood and promote the social stability.The fourth section is the analysis of legal mechanism construction in guarding against and dissolving debt problem from the angle of comparative law. The analysis is based on the relevant legal mechanism of America, Japan, France and Australia. Comparing these countries’ provisions, such as the legal system of fiscal revenue and expenditure classification, the legal system of fiscal transfer payment, the legal system of debt risk control, the legal system of crisis resolve and the legal system of information disclosure.The fifth section is the analysis of formation and insufficiency of our existing legal mechanism. It analyzes the formation of existing legal mechanism, which is in order to guard against and dissolve debt problems. In the analysis of the realistic legal mechanism, combined with foreign countries’ experience, to find the defects of relevant existing legal mechanisms. The legal mechanism of fiscal revenue and expenditure classification is not sound. The legal system of fiscal transfer payment is imperfect. The risk early-warning system is deficient. The system of government information disclosure is imperfect.The sixth section is the suggestion of perfecting our legal mechanism. Combining with the above analysis, put forward some suggestions to perfect legal mechanism construction, to guard against and dissolve debt problems. Perfecting the legal system of fiscal revenue and expenditure classification to ensure purse match with the power. Perfecting the legal system of fiscal transfer payment to promote the equalization of regional public services. Formulating the act of government bonds to wide the scope of investment and financing. Setting up a risk early-warning system and perfecting the construction of financial supervision. Through these measures to guard against and dissolve the local government debt problems.