The Research On Reconstructing Our Country’s Local Tax System Under Tax-Sharing System

Local Tax System along with the Central Tax System constitutes a country’s tax system, is an important part of modern management system of taxation. Countries around the world, no matter what kind of financial systems they are, they all attach importance to the construction of the local tax system. China is no exception. Since China implemented the reform in 1994, Chinese fiscal and taxation system reform has obtained significant achievements. Firstly, China has initially established a local tax system adapted to the socialist market economy. Secondly, the proportion of local tax revenue in fiscal revenue has risen gradually. Thirdly, the central and local governments can try their best to do the work. However, with the development of society and economy, the tax system design and tax collection and administration call for a higher level. Reconstructing local tax system for government can better play its functions.Currently, the new situation that China’s local tax system faces is that the reform program to replace the business tax with a value-added tax has been expanded nationwide and the reform will spread to more industries, which makes business disappear. As we know, local tax system reform is the breakthrough of new round of fiscal and tax reform. Under the new situation, reconstructing the local tax system is extremely urgent. It is not only a matter of the local government’s "fund sources" and the improvement of national fiscal and tax system but also a matter of our country’s fiscal governance.Local tax system comes from the tax sharing system indeed. Because constructing local tax system must be based on the theory of fiscal decentralization, reconstructing the local tax system must balance the financial and responsibility relationship between central and local government. This paper analyzes current situation the local tax system faces and problems exist. According to the situation and problems, the idea for the reconstructing the local tax system is making reasonable adjustments to the original tax division and perfecting the tax sharing system. In this article, reconstructing a comprehensive local tax system starts from several aspects, they are the tax legislation, the tax division and the tax administration. So that the local tax system can really be used to provide financial support for local government and open up a new situation for the new round of fiscal reform.