Local Government Horizontal Tax Competition From The Perspective Of Chinese Fiscal Decentralization

The tax reform in 1994 established the basic framework for China's fiscal management system.However,due to the impact of the political and economic system reform process,the tax reform is not complete.It faces the dilemma of moving down the power of affairs and moving up the financial power.This has caused the mismatch between local financial power and power,and the local financial and expenditure responsibilities are not adapted.In order to ensure the growth of its own financial resources,local governments have the motive to further deepen horizontal tax competition between regions.In this context,the 19 th National Congress of the Communist Party of China proposed: speeding up the establishment of modern fiscal system,establishing central and local fiscal relations with powers and responsibilities,coordination of financial resources,and regional balance,deepening the reform of the taxation system,and improving the local taxation system.This is an important measure to solve the above problems.Based on the concepts and theories related to Chinese-style fiscal decentralization and horizontal tax competition,this paper first analyzes the current situation of the continuous imbalance of tax revenue between the central and local governments,especially after the reform of the “transformation reform” tax system,which highlights the central government.At the same time,the proportion of central fiscal revenue to the state's fiscal revenue has been declining year by year,while the proportion of local fiscal revenue has been rising.The upward shift of income and the downward shift of expenditure have further deepened the local government's horizontal taxation.Competition;secondly,it analyzes the reasons for the three aspects of horizontal tax competition,which are driven by economic growth factors,corporate tax incentives and intergovernmental fiscal relations;finally,by collecting and collating statistics of Chinese provinces and cities from 1998 to 2016 and The indicators are tested by the spatial Dubin measurement model to analyze the impact of the increase in the central tax share ratio on the horizontal tax competition of local governments.Through the above analysis,the paper concludes that the continuous increase of the central tax revenue ratio will further deepen the horizontal tax competition,and the phased estimation results show that this mainly occurred during the period of the tax sharing reform in 2002 and gradually expanded the scope of the central taxation.This means that when studying the issue of Chinese-style horizontal tax competition,ignoring the dynamic role of the central government,it may be possible to get an inaccurate understanding.And this means that the local government's horizontal tax competition needs to be scientifically divided at all levels of government,based on the rational division of the government's pointed responsibility and financial resources.