Research On The Influence Of Fiscal Decentralization On Basic Public Service Expenditure Of Local Finance

In China's current fiscal decentralization framework,there are problems such as vague functional division between lower and upper levels of government,and mismatch between fiscal resources and expenditure responsibilities at all levels of government.At the same time,under the current fiscal system,the proportion of basic public service expenditures of total local government's fiscal expenditure is too low,and the structure of local fiscal expenditures is obviously biased.This paper attempts to explore the causal relationship between the two issues,that is the effect of fiscal decentralization on the basic public service expenditures.According to the relevant analysis of this paper,the fiscal decentralization system has the impact on basic public services' fiscal expenditure of local government at the two levels of fiscal expenditure decentralization and vertical fiscal imbalance.The impact of fiscal expenditure decentralization on local basic public service expenditure is mainly reflected in the following aspects.Due to the sinking of expenditure responsibility,local government expenditure on basic public services appears to increase on the surface.However,in fact,the irrational division of government power at all levels leads to the overall basic public services that residents receive from the central and local levels are lower than ideal.The impact of vertical fiscal imbalances on basic public services' fiscal expenditure of local government is mainly reflected in the following aspects.Firstly,the vertical fiscal imbalance makes the local fiscal expenditure incline to the field of economic construction,such as government investment and other expenditure projects,which can quickly create economic benefits and promote local tax source expansion.At the same time,the local government fiscal competition aggravates the structural bias,which makes the proportion of basic public service expenditures of local finances low,and the level of basic public service is insufficient.Secondly,the imperfect financial transfer payment system makes the use of transfer payment funds less efficient,fails to effectively compensate for the vertical fiscal imbalance,and further increases the bias of the local fiscal expenditure structure.Thirdly,local governments have inherent investment impulses.In recent years,the central government's intensified management of fiscal budgets has not effectively curbed local government investment impulses.Local governments continue to expand government investment through ‘land finance' and local financing platforms,which further reduces local government expenditure on basic public services.In addition,the lag between the reform of the fiscal decentralization related system and the deviation of local government expenditure supervision will also further increase the negative impact of current fiscal decentralization framework on basic public services' fiscal expenditure of local government.The dynamic panel threshold regression model of this paper empirically tests the impact of the theoretical analysis.The test results confirm the above inference.Although the irrational division of expenditure responsibility has in fact reduced the total amount of basic public services received by residents,the sinking of expenditure responsibility has made the fiscal expenditure decentralization still on the surface to promote the promotion of the proportion of local public basic public service expenditure.The corresponding vertical financial imbalance has a strong negative effect on the local public finance basic public service expenditure.According to the empirical results,it is the main institutional reason for the local financial structure bias and the insufficient expenditure on basic public services.Based on the conclusions of theoretical analysis and empirical analysis,this paper attempts to propose directional policy recommendations for the shortcomings of the current fiscal decentralization system.It is believed that the reform of the fiscal system that is being deepened should pay more attention to the re-division of inter-governmental functions,the elimination of vertical fiscal imbalances,the improvement of the fiscal transfer payment system,and the reform of the supporting system relating to the fiscal decentralization system.