Table of Content

16 May 2024, Volume 44 Issue 5

Previous Issue   

Strategic Planning for the New Round of Financial and Tax System Reform

GAO Peiyong

2024, 44(5):  2-8. 

Asbtract ( )   PDF (3755KB) ( )  

Related Articles | Metrics

From planning for further comprehensive deepening of reform to planning for a new round of financial and tax system reform，advancing the new round of financial and tax system reform in the historical context of further comprehensive deepening of reform not only means that 2024 is another important year for China's financial and tax system reform，but also marks the foundation and important pillar of national governance，the financial and tax system，once again entering the core area of comprehensive deepening reform
This is the first fiscal and tax system reform planned to further deepen the reform of Chinese path to modernization in an all-round way after the Third Plenary Session of the 18th CPC Central Committee fundamentally corrected the position of the fiscal and tax system for the first time from the historical height of national governance It can be believed that，based on the overall development of the Party and the country，the new round of fiscal and tax system reform will play a fundamental and supporting role in further deepening the reform and promoting the process of Chinese path to modernization
As an important part of further comprehensively deepening the reform，the plan for the new round of fiscal and tax system reform should be launched from the following four aspects: Firstly，the main direction is to focus on breaking down the system and mechanism barriers that hinder the smooth progress of Chinese path to modernization，and provide strong impetus and system guarantee for Chinese path to modernization Secondly，taking the series of reform deployments and achievements made since the Third Plenary Session of the 18th Central Committee of the Communist Party of China regarding the establishment of a modern fiscal and tax system as the logical starting point Thirdly，first focus on the concerns of relevant behavioral subjects，and focus on stabilizing their expectations，stimulating their intrinsic motivation and innovative vitality Fourthly，inheriting historical traditions and serving as a “vanguard” and “assault team” in further deepening reforms





The Connotation，Challenges and Realization Path of Fiscal Security:From the Perspective of a Holistic Approach to National Security

MA Haitao1, YAO Dongmin2, YU Shuguang2

2024, 44(5):  9-24. 

Asbtract ( )   PDF (9382KB) ( )  

Related Articles | Metrics

Fiscal security serves as the ultimate line of defense for economic security The concept of overall national security is a rich and comprehensive framework When discussing fiscal security from the perspective of overall national security，it is crucial to clarify the relationship between fiscal security and security in various other domains，especially with economic security and financial security It is necessary to define the position of fiscal security in the framework of the overall national security concept and subsequently propose a comprehensive and precise definition of fiscal security This paper attempts to identity the connotation and requisites of fiscal security from the perspective of overall national security，clarify the primary challenges facing fiscal security in our country and proposing policy pathways to achieve it 
From the perspective of overall national security，fiscal security is a crucial component of economic security and serves as a robust bulwark for financial security，providing financial assurance for the security of other domains To better coordinate development and security，and to fully leverage the defensive role of fiscal security，it is essential to ensure that there is ample fiscal space and resources to safeguard the stable operation of the economy and society，as well as to respond to various shocks Fiscal security refers to the state wherein a nations fiscal inflows and outflows are smoothly managed in the short term，while ensuring multiyear and intercyclical equilibrium in the medium term to long term，alongside maintaining reserves of fiscal space and resources to address significant shocks stemming from natural，political，economic，and social factors This state is aimed at sustaining both political stability and longterm development of the country 
At present，fiscal security in our country is primarily confronted with threats stemming from fiscal revenue and expenditure pressures，risks associated with local government debt，population aging，digital economy，natural disasters，and the complexities of the international environment In order to achieve the goal of fiscal security and promote the positive interaction between highquality development and highlevel security，future policy orientations could entail strengthening midterm fiscal planning management，establishing a longterm mechanism for government debt management，deepening the reform of the pensim insurance system，instituting a digital taxation framework harmonized with the digital economy，and establishing an efficient fiscal emergency management mechanism 





Reshaping National Development Governance：A Review of Three Decades of Tax-sharing Reform

ZHOU Shaojie1, YANG Lu2

2024, 44(5):  25-53. 

Asbtract ( )   PDF (17838KB) ( )  

Related Articles | Metrics

The fiscal system is an important part of the economic system， reflecting the operational requirements of the economic system and embodying the centrallocal fiscal relationsThe taxsharing system reform in 1994 was an inevitable choice under the specific historical conditions， and a major adjustment of the fiscal relations between the central and local governments， and a key step in the transformation from a planned economy to a market economy This paper introduces the background and main contents of the taxsharing reform， the establishment of a modern fiscal system， the reform of the fiscal system， the idea of the reform of the fiscal system， as well as the key points and difficulties of the future reform of the fiscal system The paper empirically analyzes the operation of Chinas fiscal system after the taxsharing system， and analyzes the importance of the construction of the fiscal system in the improvement of the socialist market economic system， macroeconomic regulation and control， and the enhancement of national governance capacity Based on this paper， the following conclusions can be drawn 
Firstly， the reform of tax-sharing system is a profound change in the history of Chinas fiscal system， and it is a starting point for redefining the fiscal relationship between the central government and the local government， and the continuous reform of the fiscal system after the reform of taxsharing system has promoted the rule of law of the fiscal and taxation system The reform of the fiscal system that has been continuously promoted since the taxsharing reform has continuously promoted the construction of the rule of law， standardization and internationalization of the fiscal system， and the modernization of the fiscal governance system and governance capacity
Secondly， the reform of the tax-sharing system has enhanced the fiscal extraction capacity of the State and the central Government， providing a financial foundation for effective national governance At the same time， the redistribution of financial resources between the central and local governments and the local governments control over land have led to the formation of diversified sources of financial resources for local governments， which are highly dependent on central transfers and landrelated revenues in a pattern of local governmentdominated financial expenditures， thereby also raising the issue of the sustainability and autonomy of local financial resources
Thirdly， after the reform of the tax-sharing system， the continuous improvement of the fiscal system has played a positive role in the development and governance of the country， and is the basic support for the establishment and improvement of the socialist market economic system， with the rational allocation of central and local financial resources playing an important supporting role in guaranteeing the central governments macroeconomic regulation and control， as well as in upgrading the countrys governance capacity





Three Decades of China's Intergovernmental Fiscal Transfer System：Evolution，Achievement，and Inherent Logic

LIU Yongzheng, DENG Huaicong

2024, 44(5):  54-68. 

Asbtract ( )   PDF (9054KB) ( )  

Related Articles | Metrics

The establishment of Chinas intergovernmental fiscal transfer system is an important institutional innovation of the taxsharing system （TSS） reform in 1994 This system not only constitutes an important part of Chinas modern intergovernmental fiscal system，but also provides institutional guarantee for the great success of the TSS reform in the past 30 years Looking at the past reform process，every major adjustment of the intergovernmental fiscal transfer system was taken place under the background of profound fiscal and/or economic reforms，and was always adjusted in a timely manner in accordance with the shift of national development strategy at different stages Standing at the historical juncture of the 30th anniversary of the TSS reform，this paper systematically reviews the historical evolution of Chinas intergovernmental fiscal transfer system in the past 30 years，summarizes the main achievements of its reform，and explains the inherent economic and political logic of the evolution of the transfer system over time This paper draws the following three conclusions 
First，as an important part of the modern intergovernmental fiscal system，the intergovernmental transfer system has always served the overall reform of the fiscal system in the past 30 years，and has served as an important tool for the fiscal system to fulfill national strategies and ensure the smooth advancement of economic and social reforms 
Second，in the past 30 years of reform，Chinas intergovernmental fiscal transfer system has reached remarkable achievements For one thing，the overall scale of fiscal transfer system has continued to increase，which has effectively supported the economic and social development of the underdeveloped areas in the central and western regions For another，the structure of the transfer system has been continuously optimized in the way that general fiscal transfer with the equalization purpose has been gradually established as the main component of the fiscal transfer system
Third，the historical evolution of Chinas intergovernmental fiscal transfer system has followed its inherent economic and political logic In terms of economic logic，Chinas intergovernmental fiscal transfer system has always served the overall reform of the fiscal system and has always aimed to achieve equalization of basic public services across regions In terms of political logic，Chinas intergovernmental fiscal transfer payment system has always focused on coordinating regional development and enhancing national cohesion and is oriented toward achieving specific policy goals of the central government





Local Government Debt Governance from the Perspective of Tax Sharing Reform：Theoretical Analysis and Path Outlook

GUO Yuqing

2024, 44(5):  69-80. 

Asbtract ( )   PDF (7016KB) ( )  

Related Articles | Metrics

This paper examines the historical evolution，institutional characteristics，and academic debates surrounding the tax-sharing system reform，aiming to clarify the reforms institutional effects on local government debt governance and to outline potential pathways for further reform Amidst the pursuit of highquality development，it is imperative to advance local government debt governance It not only concerns the strategic outlook of preventing and resolving major economic and financial risks，it also underscores its theoretical value There are practical significances in nurturing financial resources and fostering new development impetus Furthermore，it plays a significant role in constructing a highlevel socialist market economy system
It posits that the tax-sharing system reform effectively leverages the “dual incentives” of central and local governments，thereby laying the groundwork for a decentralized governance framework aligned with the socialist market economy From an institutional economics perspective，the reform of the taxsharing system primarily influences the policy direction of local government debt governance through fiscal and political incentives This paper aims to address three key academic debates Firstly，it argues that the financing patterns of local government debt prior to the taxsharing system reform do not diminish the institutional impacts brought about by the reform Secondly，it suggests that vertical transfer payments not only fail to mitigate the fiscal incentives of the taxsharing system reform but also exacerbate the “common pool” effect on local government debt governance Thirdly，following the implementation of the taxsharing system reform，there has been a notable shift in the motivational dynamics driving local officials towards debt financing，transitioning from “a profitdriven orientation” to “one predominantly focused on risk mitigation and avoidance strategies” Furthermore，this paper analyzes the implications of the taxsharing system reform，finding that it effectively harnesses the “dual incentives” of central and local governments，thereby encouraging local governments to issue debt for the construction of municipal infrastructure By integrating administrative mobilization capabilities with market enhancement abilities，the reform has spurred considerable infrastructure development at the local level However，the focus on “respond to superiors” rather than “respond to subordinates” in the responsibility constraint mechanism has also led to the continuous generation，expansion，and concealed accumulation of local government debt risks 
This paper provides strategic reform directions for fiscal power division，authority allocation，administrative supervision，and market constraints to promote the taxsharing reform and local government debt governance under the context of highquality development，with the aim of building a highlevel socialist market economy system





The Underlying Logic and Top Design of the Sub-provincial Fiscal System

WANG Zhenyu, ZHANG Hang

2024, 44(5):  81-92. 

Asbtract ( )   PDF (7133KB) ( )  

Related Articles | Metrics

The subprovincial fiscal system is a synthesis and synergy of many interest relationships such as administrative subordination relationship，fiscal relationship and principalagent relationship among local governments It not only has the general characteristics of the taxsharing fiscal management system，but also follows some underlying logic，allocating fiscal resources in subprovince and maintaining the basic operation and general equilibrium of local finance By introducing the expression of the underlying logic，this paper aims to reveal some basic problems and deductive mechanisms in the subprovincial fiscal system，so as to excavate the real propositions and conduct academic reviews，in order to provide accurate and effective supply schemes for planning a new round of fiscal and taxation system reform
 The analysis shows that the subprovincial fiscal system follows some underlying logics and embodies various forms of existence and operation rules Firstly，the subprovincial fiscal system not only presents the general attribute of “onelevel government，onelevel finance”，but also includes various special forms such as various functional areas，county management of township finance，direct provincial supervision of county finance and separately planned cities Secondly，the basic elements of the fiscal system，such as power，matters，affairs，responsibility and fiscal power，fiscal resources，fiscal fund，fiscal responsibility，are specifically matched among local governments to maintain the basic operation of the subprovincial fiscal system Thirdly，under the mechanism of “decisionmaking at the higher level，implementation at the lower level，accountability at the higher level，responsibility at the lower level”，residual fiscal expenditure responsibility continues to move down to the lower level of government，forming vertical fiscal imbalances Fourthly，under the condition of tight balance，weak balance and difficult balance，priorities are the basic principle of local fiscal expenditure，forming the deductive logic of new expenditure orders and risks Fifthly，with the rise of the central region，the successful implementation of the western development strategy，the disappointing revitalization of the old industrial bases such as the northeast，and the NorthSouth divide in economic development，the regional finance shows a phenomenon of “central region” Sixthly，the subprovincial fiscal system is a complete institutional ecology In addition to realizing the “inner cycle” of reasonable adaptation of its own institutional elements，it should also simultaneously consider the related “outer cycle”
Based on the proposal and abstraction of the underlying logics of the subprovincial fiscal system，grasping the basic laws of local finance and adhering to the problemoriented，this paper puts forward some brief suggestions to deepen the toplevel design of the subprovincial fiscal system，including improving the subprovincial fiscal system，enhancing the mesocontrol ability of provincial finance，implementing the strategy of local fiscal revitalization，optimizing the fiscal transfer payment system，accelerating the standardization of basic public services，improving the construction of the local tax system，improving the ecological environment of the subprovincial fiscal system，and improving the legal level of subprovincial intergovernmental fiscal relationship





Sub-provincial Fiscal Distribution System and Quality of Fiscal Revenue：Research Based on Nontax Revenue

LYU Bingyang1, LI Zhaoyi1, DAI Min2

2024, 44(5):  93-110. 

Asbtract ( )   PDF (12084KB) ( )  

Related Articles | Metrics

Improving the quality of fiscal revenue is an important component of modern budget system construction and a key guarantee for achieving high-quality economic development In recent years，China has implemented largescale tax reduction and fee reduction reforms，resulting in a continuous decline in tax revenue growth rates，while nontax revenue has shown an increasing trend The rising nontax revenue poses a threat to the quality of fiscal revenue，which will directly affect the effectiveness of tax reduction and fee reduction policies Although the central government has taken a series of measures to strengthen the management of nontax revenue，the management of nontax revenue by some local governments is still not standardized enough in practice Against this background，this paper constructs a theoretical model combined with econometric analysis to analyze the impact of intergovernmental fiscal revenue distribution on the scale of local nontax revenue，providing a new perspective for exploring the institutional basis of fiscal revenue quality
This paper incorporates both taxes and nontax revenue into the theoretical model for analysis The theoretical results indicate that a decrease in the tax revenue distribution ratio will increase the relative scale of nontax revenue and reduce the quality of fiscal revenue，with a certain distortion effect on the total nontax revenue Empirical analysis based on largesample data at the city and county levels shows that for every 1 percentage point decrease in taxsharing rate，the scale of local nontax revenue increases by approximately 127%，and the quality of fiscal revenue decreases by about 202% This demonstrates that the fiscal distribution system is an important institutional factor affecting the scale of nontax revenue and the quality of fiscal revenue Heterogeneity analysis shows that regions with lower degrees of state ownership and standardized management of nontax revenue have relatively smaller changes in nontax revenue scale，while improving the quality of fiscal fund auditing and strengthening legal construction are conducive to enhancing the quality of fiscal revenue
This paper can provide valuable references for the construction of China's modern fiscal system On the one hand，for the establishment of a sound fiscal system below the provincial level，it is necessary to further standardize the sharing mechanism of revenue below the provincial level and gradually unify the sharingrules of tax and nontax revenue to reduce the uncertainty brought about by changes in the fiscal distribution system At the same time，efforts should continue to promote local tax reform and adjust the distribution relationship between provincial governments and city/county governments for tax categories with significant volatility On the other hand，for the improvement of the modern budget system，it is necessary to further deepen the reform of budget management systems，standardize government revenue budget management，strictly enforce regulations related to nontax revenue，and strengthen the constraints on fiscal violations In addition，efforts should be made to further enhance budget coordination，and nontax revenue collected by various departments and units should be fully remitted to the government on time，paying more attention to activating idle stock resources and improving the efficiency of fiscal fund allocation





Competition or Cooperation：The Choice of Governments'Behaviorunder Vertical Fiscal Relation Reform

ZHAO Xujie1, NING Jing2, ZHANG Shengzhe3, YU Chao4

2024, 44(5):  111-126. 

Asbtract ( )   PDF (10315KB) ( )  

Related Articles | Metrics

Intergovernmental vertical fiscal competition and cooperation are important issues in the research of vertical fiscal relations China's initiation of the ProvinceManagingCounty （PMC） reform in 2004 provided a favorable opportunity to explore the dynamic choices of intergovernmental vertical fiscal competition and cooperation under the reform of vertical fiscal relations Since the PMC reform was not uniformly implemented but rather piloted in certain provinces，there are both reformed and nonreformed counties under the same prefecturelevel city This situation provides an excellent opportunity to investigate the decisionmaking of intergovernmental vertical fiscal competition or cooperation under the changes in vertical fiscal relations Before and after the reform，the fiscal affairs of nonreformed counties were under the direct jurisdiction of prefecturelevel cities If prefecturelevel cities where these counties were located initiated pilot reforms of the PMC，these nonreformed counties became what we term “remaining nonreformed counties”Since prefecturelevel cities might incur financial losses due to the reform，prefecturelevel cities no longer had direct fiscal jurisdiction over reformed counties，nor influence over their fiscal interests However，the fiscal affairs of remaining nonreformed counties continued to be directly managed by prefecturelevel cities Therefore，prefecturelevel cities，in addition to their own efforts，might engage in vertical fiscal competition or cooperation with remaining nonreformed counties to compensate for their own interests，thus potentially impacting the fiscal situation of these counties Based on this premise，the dynamic choice problem of intergovernmental vertical fiscal competition or cooperation can be explored under the reform of vertical fiscal relations
 To analyze this，we utilized county-level panel data from 1997 to 2009 and constructed a DID model to conduct empirical analysis The findings suggest that when prefecturelevel cities suffered financial losses due to the PMC reform，fiscal expenditures and transfer payments of nonreformed counties still under their jurisdiction tended to increase This indicates that prefecturelevel cities might provide assistance to remaining nonreformed counties to achieve cooperation for mutual benefits This result was robust and confirmed through various robustness tests including additional control variables，PSMDID，and placebo tests Heterogeneity analysis revealed that prefecturelevel cities in situations characterized by “strong prefecturelevel cities and weak counties” and prefecturelevel cities with strong revenuegenerating capabilities from governmental funds tended to provide greater assistance to remaining nonreformed counties Prefecturelevel cities primarily relied on special transfer payment tools rather than general transfer payments to provide assistance to remaining nonreformed counties