Study On The Impact Of Intergovernmental Fiscal Relationships And The Way Of Adjustment After The Reform Of Replacing Business Tax With Value-added Tax

Ever since 2012,the reform of replacing business tax with value-added tax was implemented among part of cities and industries in China.It is on May 1st 2016 that this reform finally spreads all over the countries and industries.During these five years,this reform not only decreases tax burden for enterprises,optimizes taxation structures but also enhance China's supply-side structural reform and industry revolution,adding oil to the economic steady growth and market vitality.However,as a simple tax reform,it has become a vital lever to continue China's fiscal and taxation system reform as a whole,which will make a big difference to the intergovernmental fiscal relationship.In fact,the intergovernmental fiscal relationship is a kind of fiscal decentralization including the distribution of fiscal revenues,the arrangement of fiscal expenditure,transfer payments and fiscal management among different levels of governments.To deal with the potential effects on fiscal relationship among governments from this reform,the State Council has carried out many proposals such as adjusting the distribution of value-added tax between the central and local governments,impelling the arrangements of fiscal responsibilities from central to the local,aiming at make clear the intergovernmental fiscal relationship and remain the existing financial resources of the local governments unchanged.This paper,firstly analysis the current situation of intergovernmental fiscal relationships of our country and then tries to study how this reform influences the intergovernmental fiscal relationships.From the perspective of vertical fiscal relationships,we use three different forms of fiscal decentralization as a measurement and it turns out that the reform decreases China's fiscal decentralization to some extent.Then,we try to find how this reform affects the fiscal revenues of local governments and it turns out that after the reform,for the local governments,the tax revenue per capita decreases,while the non-tax revenue per capita and transfer payments per capita increases.From the perspective of horizontal fiscal relationships,this reform decreases China's fiscal decentralization especially for the middle and western part of China,and the tax revenue per capita decreases more in the middle and western areas while transfer payments per capita decreases in the East on the contrary.As a result,this paper holds that in the short term,the allocation of fiscal revenue among governments should be adjusted,including adjusting the distribution of value-added tax between the central and local governments according to different parts of China,establishing the mechanism of horizontal transfer payments,renewing the taxation system of local governments under the background of share taxation model,however in a long term dividing fiscal responsibilities of local governments from the bottom to the top should be taken as a priority.