The Impact Of Land Finance On Local Financial Risks

After the reform of the tax-sharing system in 1994,along with the continuous advancement of China's urbanization and industrialization process,coupled with the promotion of China's land system and the performance appraisal system of local government officials,China's land finance phenomenon has been generated and continues to develop.Land finance has made great contributions to China's economic and social development:it has alleviated the financial difficulties of China's local government tax-sharing reform,improved public infrastructure,promoted China's urbanization process,and promoted China's economic growth and development.However,there are also many problems in the land finance itself,which have negative impacts in various fields such as politics,economy and society.In particular,the increase of local fiscal risks brought about by land finance has aroused widespread concern in the academic circles.This paper analyzes the different impact mechanisms of land transfer fees and real estate taxes on local fiscal risks from the perspective of two major components of land fiscal revenue:land transfer fees and real estate taxes.The analysis found that the growth of land transfer fees has increased local fiscal revenue risk,local fiscal expenditure risk and macroeconomic risk from three different perspectives,thus positively promoting local fiscal risks;The small-scale real estate tax increases the dependence of local governments on land transfer fees,restricts the development of the economy,and does not effectively play its role in stabilizing housing prices and promoting the healthy development of the real estate market,resulting in an increase in local fiscal risks.Real estate tax has a reverse inhibitory effect on local fiscal risks.This paper further analyzes the causes and current situation of local fiscal risks in China's land finance model.The analysis found that on the one hand,China's current imperfect financial management system has caused the local fiscal revenue and expenditure gap to expand,resulting in local finances' excessive dependence on land finance and increasing local fiscal risks;On the other hand,the land finance has led to the unsustainable growth of local fiscal revenue,and it is unable to fundamentally solve the situation of the increasing scale of local fiscal expenditures in China,which has led to the continuous increase of local fiscal risks facing China.Based on this theory,this paper conducts an empirical analysis of the impact of land finance on local fiscal risks.First,the analytic hierarchy process is used to construct a local fiscal risk indicator system to measure the local fiscal risk value of 30 provinces in mainland China from 2001 to 2016;Then,using the above data,a dynamic panel data model based on generalized moment estimation is constructed to further analyze the impact of land finance on local fiscal risks.The empirical analysis found that:(1)under the land fiscal model,the excessive proportion of land transfer fees to local fiscal revenue and the low proportion of real estate tax to local fiscal revenue are important reasons for the increase of local fiscal risks;(2)there are significant differences in the impact of real estate taxes on local fiscal risks in different links.Among them,the real estate tax on holding links has a more significant effect on the reduction of local fiscal risks;(3)there are regional differences in the impact of land transfer fees and real estate taxes on local fiscal risks in the eastern,central and western provinces of China.In view of the above research conclusions,in order to reduce local fiscal risks under the influence of land finance and realize the sustainable and healthy development of regional economy,this paper puts forward policy suggestions from three aspects:reforming land transfer system,implementing real estate tax system reform and establishing and improving local financial risk early warning mechanism.