Research On PPP Hidden Fiscal Risks Under Tax Cut And Fee Reduction

In recent years,in order to ensure healthy economic development and promote stable economic operation,the state has taken a series of measures to continuously deepen the supply-side structural reform.Although China’s fiscal revenue growth is weak and fiscal expenditure is rigid,the reduction of tax and fees,as an important part of the supply-side structural reform,is still increasing,resulting in further aggravation of the imbalance between government revenue and expenditure,continuous expansion of the fiscal deficit,and a hidden danger to the fiscal risks of local governments.PPP,or public-private partnership,is an important measure taken by local governments to actively deal with financial risks.On the other hand,PPP can hide fiscal risks off the government’s balance sheet through "off-balance-sheet financing".PPP has gone through five stages in China,namely,exploration,initial development,vigorous promotion,prudent development and comprehensive promotion.It has played a positive role in smoothing the government’s fiscal expenditure and improving the use efficiency of fiscal funds.However,the overheated and over-rapid development of PPP leads to a rise in the financial risk level of PPP.If the financial risk level of PPP is too high,it is easy to cause greater financial risk.Therefore,to measure and identify the financial risk level of PPP is crucial for preventing and controlling local financial risks and standardizing the use of PPP.On November 16,2017,the ministry of finance issued the notice on standardizing the management of project library of government and social capital partnership(PPP)integrated information platform(no.After this rectification,the growth rate of PPP slowed down obviously,and the development of PPP gradually returned to rationality.Based on the characteristics of"off-balance sheet financing" of PPP,in which risks are hidden off the government’s balance sheet,this paper takes the development and changes of PPP before and after document 92 as a sign to make an empirical study on whether local governments use PPP for the purpose of hiding financial risks.This article consists of six parts.The first part firstly introduces the background and significance of the research,defines the relevant concepts,and expounds the innovation points and shortcomings of the research.In the second part,the relevant literature at home and abroad is summarized and reviewed.The third part introduces the development history of China’s PPP,and makes statistics on all the projects in the PPP project library by December 31,2019,so as to analyze the current development status of China’s PPP.The fourth part firstly analyzes the fiscal situation of local government under the circumstance of tax reduction and fee reduction,and then measures the financial risk level of PPP.Specifically,this part based on PPP fiscal risks can be hidden beyond the balance sheet,the characteristics of project information released through the summary of the PPP project,calculation of the local government fiscal spending the next year the PPP proportion of general public spending,with 10%"red line" as the benchmark,to measure the financial risk level of PPP.The fifth part analyzes whether the local government USES PPP to conceal financial risks from the empirical perspective.Firstly,a hypothesis is proposed based on the characteristics that PPP can hide financial risks off the balance sheet and the development changes of PPP before and after the publication of document 92.Then the fixed effect model is constructed for empirical analysis.The study found that there was no significant change in the effect of fiscal risks on the use of PPP by local governments before and after the publication of document 92,so there was no purpose of concealing financial risks when local governments used PPP under the circumstance of tax reduction and fee reduction.The sixth part summarizes the previous research and analysis,and puts forward relevant policy Suggestions on how to better develop PPP,promote the supply-side structural reform and promote economic development.The innovation of this paper is that it measures the financial risk level of PPP in China and finds that PPP may potentially conceal certain financial risks.On this basis,a more rigorous empirical study is carried out to explore whether the purpose of hiding financial risks exists in the use of PPP by local governments in China,which is of great significance for standardizing the operation of PPP and strengthening the supervision of financial risks of local governments.