The Cause, Development And Transformation Of Local Government Land Finance In China

Land finance is a deformity finances which means local governments mainly rely on land sales to obtain land transfer income to meet the needs of its spending, it is unsustainable. Because the land is a kind of non-renewable scarce resources, one day it will sell out, and the short-term pursuit of land finance makes the local governments only focus on short-term interests and don’t pay attention to improve the community environment and long-term development, I think in the present stage, the most of important things is implement the reform on the land finance, gradually reverse the government dependence on land finance, so that the local government can have a steady and sustained fiscal revenue in the future.This article mainly analyze the causes of land finance, development course, the constitute and its scale, the degree of government dependence on land finance, on the other side, this paper also analyze the impact it bring to social economy on various aspects, at last, the related advice is given, then the specific content is as follows:First, in the introduction, we clearly expound the research background, research significance and research purposes, and summarize the literature achievement of land finance research,then summed up the shortcomings of this paper.Second, we give a general summary of the definition of land finance on the basis of previous researches. We defined land finance as an phenomenon that local government lease land ownership and levy land-related and land-nonrelated tax to balance fiscal spending in the light of economic system reform and urbanization, in which land could be the carrier. In addition, we also analyze theoretical foundation of formation of land finance, including theories of reverse soft constraint, Tiebout, fiscal decentralization, land income distribution and sustainable finance.Third, we give special analysis and calculation of structure and scale of land finance in terms of land sales revenue and taxes which are related to land directly and indirectly. The result revealed that the share of land financial revenue in local government revenue is rising in spite of fluctuating and degree of dependency on land finance can be regional:the revenue of developed areas can be more easily affected by land financial revenue than that of developing areas.Fourth, We analyze the reasons for the formation of China’s land finance, including asymmetry of authority and financial rights arising by reform of tax distribution system, sick fiscal and taxation system, nonstandard land management and excessive urban expansion. In the fifth chapter, we analyze positive and negative effects on society and economic bring by land finance. The implementation of land finance can promote economic growth and social development, relieve the strain on the government funds in positive way, on the other hand it may bring intergenerational unfairness and unsustainable finance, farmers’ interests-damaging, wasting of land resources, rising of estate price and illegal occupation of land resources in negative way. On the basis of previous analysis, we propose some advices that can accelerate the transition of China’ land finance and reverse dependence on land finance of local government in our country.