The Research On The Current Problems Of Chinese Local Government’s Land Finance

Generation of our national local government’s land finance model has relatively complicated and deep reasons in China, under our national financial management system, property ownership goes towards, central and local governments do not have corresponding property ownership and authority of office. To be specific, Local government’s fiscal expenditure has higher proportion than central government in fiscal expenditure of the whole country, but local government’s fiscal revenue has been less than central government for many years, or just be the same with the latter. Under current land finance model, land finance is mainly composed of three parts, namely land-transferring fee, land related revenue and land financing mortgage loan. Land-transferring fee means local government’s one-off income by transferring use right state-owned land, land related revenue mainly contains direct tax and indirect land tax. Direct land tax mainly contains deed tax, property tax, land value-added tax, cultivated land usage tax and urban land use tax; indirect land tax mainly means two industries closely related to land--construction and real estate industries’business tax and enterprise income tax. Business tax of construction and real estate industries can be taken as local tax, which is classified as income of land finance, enterprise income tax is partially classified as income of land finance according to local and central governments’dividing proportion. Land financing mortgage loan is local government’s loan from financial organizations through land mortgage, this income is equivalent to government’s debt, when we estimate scale of land finance in chapter 2, we will not account it into the total amount of land finance, but it is extremely necessary to research it, it is because it has close relation with local financing platform, which is possible to cause certain financial risk.Chapter 1 first expounds on definition and characteristics of land finance and then analyzes relevant theories of land finance, including the financial decentralization theories, financial expenditure scale growth theory and the rent theory. Land finance is a financial mode emerging during the transition process of China’s economic and social development. Local governments regard land finance as the "second finance." A typical characteristic of it is that local governments earn revenues through land leasing by selling state-controlled land or expropriating land of residents or collectives. The profound exposition on relevant theories of land finance lays a solid theoretical foundation for the research in the following chapters. Chapter 2 proceeds from the essence of land finance in the broad sense, analyzes its major constituents and characteristics, estimates the scale of land finance and conducts statistical analysis. Based on the previous statistical data and analysis, Chapter 3 discusses problems existing in land finance. These problems can be divided into two kinds. First, problems of land finance itself are mainly reflected as the negative influence on the land financial revenues and expenditures. Problems incurred by land finance mainly refer to the negative influence of the current land financial mode on economic and social development. Chapter 4 explores causes of the above land finance problems from three aspects, namely administrative, economic and financial systems. The last chapter or Chapter 5 summarizes three principles for land financial reform to adhere to, including digging stock, sticking to step-by-step progress and emphasizing on systems and laws. Approaches for land financial reform are also analyzed in details.