Fiscal Decentralization And Administrative Costs

As an indicator to measure the scale of local government and the quality of public service provided,administrative cost can reflect the structure and efficiency of a government's fiscal expenditure.From the perspective of the transformation of service-oriented government functions,it can also demonstrate the strength of its consciousness of providing public services to residents of the jurisdiction and the degree of self-responsibility and restraint.At the same time,fiscal decentralization is an important research field of public finance.In the context of the reform of the tax sharing system,its applicability in China still has content that can be explored.After reviewing the literature,it is found that the results of studying these two fields are numerous,but there is still lack of domestic research literatures that deeply discuss the relationship between the two.Therefore,this article takes the administrative costs of 30 provinces,municipalities and autonomous regions(excluding Tibet)from 2007 to 2012 as the research object.From the perspective of fiscal decentralization between the central and local governments,which aims to study the main factors affecting the administrative costs of local governments in China and explore the correlation between government administrative costs and fiscal decentralization.Through the construction of panel data,regression analysis was used to measure its impact on the administrative cost of local governments.Among them,tax autonomy was particularly taken as the core independent variable describing fiscal decentralization.Taking the differences in economic development and fiscal policies of local governments in eastern,central,and western China into account,after proving the effect of tax autonomy on administrative costs,a second test was conducted by region.The empirical results show that the local government's tax autonomy has a significant positive effect on increasing general public service expenditures and improving the efficiency of local public service project expenditures.That is,when a local government can rely on its own tax revenue to complete the central government's expenditure delegation task,It will show expenditure propensity in maintaining government operations,medical education and other public service related projects.This conclusion has also passed the robustness test of alternative indicators.In terms of regions,the above conclusions show different saliency in the central and western regions: the central and eastern regions still follow this rule,while the western region does not reflect the statistical significance.This is related to differences in resources and development endowments caused by objective historical and geographical factors,as well as existing financial system arrangements such as transfer payments and counterpart assistance.On the basis of this research,this article provides possible enlightenment for research and policy operations in related fields,and puts forward the following suggestions from the three levels of macro,meso and micro: From the macro level,we should start with the construction of the system concept,and clearly give the need for local government financial autonomy.From a meso level,we should start with policies,which means strengthen incentives and to be self-disciplined.Specifically,economically developed “tax-paying provinces” should be given more financial autonomy to increase the autonomy of local economic development,and the strategy of “whipping fast cattle” should not be excessively used to prevent their long-term development enthusiasm.For the western region,on the basis of guaranteeing the input and quality of basic public services,the incentive direction of transfer payments should be adjusted to reduce their reliance on central transfer payments,forcing them to change their public service concepts and increase expenditure efficiency.In order to enhance the operability of countermeasures,it is possible to make a difference on the level of legal reservations established by taxes.Microscopically,local governments should effectively enhance the service awareness,modern governance capabilities and management level of residents in their jurisdictions,changing the short-sighted behavior of "just looking at the present,not looking for the long-term" and make the fiscal distribution decision more "people-centric".Doing effort to be self-disciplined,and regulate one's behaviors.Last but not least,be open and transparent and ensure the dynamic stability of central-local relations in fiscal decentralization.