A Study of Problems with Fiscal Decentralization in China

Abstract

With regard to the practice of fiscal decentralization,China's fiscal system reform has undergone three main stages since the founding of the PRC.How to make a reasonable division of rights between the central government and local governments at various levels has always been a matter of great importance as well as great difficulty in the process of fiscal system reform in China.To verify the effects of the reform,we should make concrete analyses of the actuality of China's fiscal decentralization.In particular,descriptive statistical analyses should be conducted to reveal a comprehensive and detailed picture of the reality of fiscal decentralization from the tax reform in 1994 up to the present.After the reform,there has been an obvious change of balance between taxation and public finance,as is shown by these facts:tax right is too concentrated in the hands of the central government whereas the increase of local fiscal expenditure is too fast and its self-sufficiency is far lower than that of the central government;more resources are flowing from in-budget to off budget;fiscal discrepancy among provinces is extended;and the course of fiscal decentralization reform is still at avery rudimentary stage.