The Research Of Land Finance And Power Allocation Between Central And Local Governments

After the reform of Tax Distribution System, there emerges excessive concentration of financial control. As a result, the local government looks for new ways to get financial income among which the land-transferring fee becomes a major source. This refers to ‘land finance’. It cannot be denied that land finance did have positive impact on lessening the pressure that local governments have upon financial issues, and promoting the economic and social development. However, the lands that are available for granting and leasing becomes less and less while the huge profit brought by land-transfer become obvious. When the land finance become increasing fierce, the nature of land finance changes. Land finance has transferred from an unavoidable choice to fund the fiscal gaps to a cash cow for local governments, even a kind of governmental action that pushes up the housing price and infringes civil rights。With digging deep into the emergence of land finance, it is easy to notice the flaws of the power allocation in our country’s financial system. To be specific, firstly, excessively decentralized routine power lacks support from excessively centralized finance-control. Thus it is quite hard to assure the effective and efficient fulfillment of government duties, with the limited financial support. Secondly, the inherent flaws of finance transfer payment system means the many local government authorities cannot depend on this system to get enough financial resources to ensure the management of public affairs. And this system cannot help local governments fill the fiscal gaps resulting from the imperfect finance control. Furthermore, the absence of corresponding laws and regulations in this field leads to the blurring boundaries between central and local government in routine and finance control. Meanwhile, over dependence upon the administrative management leads to the instability, non-transparency, short-termism of financial and tax system, and breeds the corruption problems of governmental officials.Therefore, in order to solve the problems of land finance, it is imperative to set clear rules in constitution and law to regulate the allocation of power between central and local governmental authorities, strengthen the ex-post supervising measures and gradually establish effective supervising mechanism over land finance, within the framework of constitutional construction and legal principle in taxation.