Whether Local Debt Reduces Local Government's Fiscal Revenue And Expenditure Violations

In October 2011,the ministry of finance promulgated the measures for the pilot issuance of bonds by local governments in 2011,allowing Shanghai,zhejiang,guangdong and shenzhen to issue bonds on a pilot basis.This means that after the reform of tax distribution system in 1994,local governments obtained the financing power for the first time,which also marks that the local government debts with local government bonds as the main content began to form.At present,local debt has become an important issue affecting China's economic operation.The precondition of preventing and resolving local government debt is to have a relatively objective,scientific and reasonable clear understanding of it.Based on the historical perspective,this paper reviews the emergence and development process of local government bonds,and sorts out in detail the transformation of fiscal environment faced by local governments before and after the pilot program of local government bonds.In particular,it demonstrates the significance of local bonds in alleviating the fiscal revenue and expenditure dilemma of local governments from the perspective of institutional evolution.At the same time,this paper also analyzes the mechanism and channel of the influence of local government bonds on local government revenue and expenditure irregularities.As a result of China's dual financial structure,the local government debt problem is actually a system problem.The issuance of local government bonds is an important adjustment to solve the"mismatch between financial power and administrative power"faced by local governments under this system and the resulting revenue and expenditure dilemma.On this basis,this paper points out that the local government debt problem is a means to relieve the local government revenue and expenditure dilemma under the dual fiscal structure of central and local finance in China.Irregularities system considering the local government revenue and expenditures,the tax is the financial dilemma under the such a judgment,we think that the pilot areas where the government can raise funds by issuing local government bonds,without having to commit irregularities,choose financial revenue and expenditure of the local government financing power,independent issue local government bonds,even by their own is not enough to fully get the money,bond issuance by issuance of income also makes the local government funding gap decreases.Therefore,the policy effect of local debt pilot will be reflected in the reduction of fiscal revenue and expenditure irregularities of local governments.In the fiscal revenue composition of'these pilot provinces and cities,in addition to the original revenue composition,there is more debt fund income,which is a compliant capital source.Obviously,the local government with financing autonomy will relieve its financial pressure to some extent.As a quasi-natural experiment,the local debt pilot project provides us with an effective and vivid research sample,which helps us to understand the formation and development of local debt.By sorting out and analyzing the relevant data of China audit yearbook,China statistical yearbook,China finance yearbook and audit announcement published by audit institutions,this paper has successfully carried out the demonstration of local debt voluntary pilot policy and audit illegal funds by using difference in differences(DID)method.The results show that the local debt policy can indeed expand the financing capacity of local governments and reduce the fiscal revenue and expenditure irregularities of local governments to some extent.This is mainly reflected in the net effect of the pilot policy will reduce audit irregularities found by audit institutions in the audit funds.Despite the significant decline in the level of audit projects,fiscal expenditure,regional GDP and central government subsidy income,the local debt policy can still expand the financing capacity of local governments and reduce their fiscal revenue and expenditure irregularities to some extent.Therefore,this also verifies our conclusion in the theoretical analysis that the issuance of local government bonds can alleviate the financial dilemma of local governments.