Effect, Causes And Solutions Of Land Finance Under The Tax Distribution System

Great changes have taken place since the reform of tax distribution system in 1994, the expenditure responsibilities of local government did not reduce but increase, leading to the property rights are gradually weakened, barely relying on the budget revenue has been unable to meet the demand of spending of local government. In the face of severe financial expenditure stress, local government having been looking for new sources of revenue, they gradually go to the road to sell land in order to solve the problem of lack of funds, and the concept of land finance entered to people’s vision. In 1998, our country reformed welfare housing policy, opened a new pattern to sell land to obtain economic construction funds which local government relying on,and then brought new opportunity for local government to sell land to obtain financial income. In this mode, land revenue and tax income relating to land became an integral part of the financial revenue of local government. However, the rapid expansion of land finance in short-term gradually aggravated local government relying on land, and this part of revenue is even higher than general budget revenue of local government, thus leading to more and more economic and social problems.In view of the influence, causes and measures under the reform of tax distribution system, the research ideology of this paper are as below:1.Determine a definition for land finance, and analyze the composition and scale of it, including land revenue, tax income directly related to land, and tax income indirectly related to land. At the same time, use relevant data to show the composition and scale of land finance in Shandong Province under the tax distribution system.2.Although land finance has played a certain role in promoting economic development and urban construction, and to a certain extent, it also ease the pressure on local government finance, but land finance had a negative impact on housing and social harmony, and considering the limited amount of land, the land finance of local government as well has a unsustainable risk. 3.Analyze the causes of land finance from two aspects: the reform of tax distribution system and the incentive mechanism of local government, to conducting the theory analysis of land finance causes under the framework of tax distribution system.4.Using the econometric model, this paper verified the relationship between land finance and the theoretical causes of it.5.According to the causes of land finance and the hazards it lead, put forward a series of countermeasures to solve the problem which local government relying on land finance.