The Research Of Social Security Responsibility Distribution Between Central And Local Governments

Since the reformation of tax-sharing in 1994, the distribution of fiscal income between central and local governments has been re-defined, at the same time of the rocketed central fiscal capacity, the distribution of social security responsibility between central and local governments has still drawn a blank. Due to excessive responsibility of social security which shouldered by the local governments, with slender necessary fiscal capability, the local finance has been struggling. Even though the objective, "Both the central and local governments have fiscal resources proportionate to their duties and responsibilities, accelerating the establishment of a unified, and enhancing the public services provision capacity of grass-roots governments", has been proposed in the Seventeenth and Eighteenth National Congress of the Communist Party of China, in fact there are not any substantive changes. One of the reasons is the lacking of systematic theoretical principles and guidance. In order to rebalance the social security responsibility and fiscal capacity between central and local governments, promote the perfection of social security system in China. On the basis of the social security responsibility distribution international experience and fiscal decentralization theory related enlightenment, oriented by seven principles, such as Political Principle, Parity of Authority and Responsibility Principle, as well as Balancing Consideration to Equality and Efficiency Principle, this thesis will develop a comprehensive system of central and local government fiscal accountability division of social security program, according to the differences of the administrative subordination, territory, prorate distribution, and project.In the design of the allocation scheme, wherein the central government was responsible for:catastrophic natural disasters, fiscal gap of the national subsistence allowances expenditure which if the province is lower than the national average level; death grant, retirement settlement; level one to five of the disability pension spending for public officials; the expenses of central public employment platforms and services; 25% of the housing subsidization for the central region, and 50% of housing subsidization for the west region; subsidy of medical insurance for the midwest; central institutions and civil servants medicaid spending, fund for the central level retirees of administrations and institutions; funds for national social security programs replenishment, historic debt of endowment insurance,50% of the expenditure for new rural social endowment insurance in the east region and 100% for the central and west region. The local governments are responsible for the remaining social security fiscal expenditures.Based upon the system of fiscal accountability division of social security program advocated, recur to the public finance as well as social security related theories, a corresponding calculation method has been introduced by the author and various calculations has been taken for the project-specific expenditures of the social security program. Whereby calculated the central and local governments should bear the expense ratio of about 30:70, compared to the actual proportion of 6:94, central government expenditure responsibilities assumed greatly enhance, reduced the dependence on central transfers and pressure of the local governments, which should help to improve local government finances. The finding of this thesis contains the same orientation with The Third Plenary Session of the Eighteen Communist Party of China Central Committee, which advocated "moderately strengthen the central authority of governance and the expenditure responsibilities".Finally, the thesis proposed policy recommendations, which is listed below: firstly, consummate the top layer design of the system, progress the reformation of social security responsibility distribution between all levels of government steadily; secondly, prorate fiscal revenue by the responsibility each levels of governments undertook; thirdly, further perfect the system of our country’s Financial Transfer and Payment; fourthly, appropriately reduce government series, improve administrative efficiency; fifthly, assess the implement of local government social security policy actively; sixthly, strengthen supervision from all sides, improve management and oversight mechanisms.