Research On Fiscal Risk From Prospective Of The Abnormal Growth Of Tax Revenue

China's Tax Revenue growth rate has been exceeding the GDP growth rate for more than 10 years, which has appealed the wide attention and arguments from the government, the academic community, the news media, as well as the whole society, who considering whether the rate increased too fast to erode the tax base or to raise the macro tax burden.This paper aims to direct the theme to the security and stability of the government's financial operation, by way of exploring the impact of abnormal and uneven growth of China's Tax Revenue, i.e. the financial risks'probability of occurrence, shaping path and possible consequences. Covering many hot topics, this research starts from financial risks derived from government operation, and tries to analyze and reveal logic relationship and internal mechanism behind these phenomena.The author defines the growth of China's Tax Revenue as two forms:Stationarity and Disequilibrium. The aspects of content mainly discussed include a) general financial risk; b) local financial risk; c) intrinsic institutional risk arose from mismatching of responsibility and fiscal rights between central and local governments.The author's main conclusive opinions are as follows:a) How to allocate national wealth among governments, enterprises and residents is a big and severe task. The taxation need to play a positive role. If the government imposes heavy taxation on enterprises and residents, there will be risks that erode the fundamentals of economic and taxation sources, which will eventually damage the financial stability of government operation.b) Compared with developed countries, the supernormal growth and non-balanced development in China's tax in recent years guaranteed the effectiveness of the fiscal policy implementation and the increasing spending needs in the period of transition. On the other hand, we should not indulge bigger budget deficit and should control deficit level to ensure the limited resources and tax revenue to be used effectively and efficiently.c) Although we keep a comparatively low fiscal deficit ratio, covert deficit and overdraw deficit exist, which increase the probability of financial risk occurrence. Because the statistical methods of government revenues and expenditures are non-standard in China, it is hard to identify the real fiscal deficit. Though the current national debts are not high, the continued debt increase may bring certain risks, which may cause the central government financial risks.d) At present, financial risks, especially local invisible liability risks and'land financial risk'mainly concentrate on local government rather than the central government. Local government's financial risks derive from a variety of complex factors, such as regional economic development imbalance, institutional factors like tax-sharing system, etc. In the future, the basic measures of controlling covert and overdraw deficit level are to reform and deepen the relationship between the central government and local government under the tax-sharing system to adjust their responsibility and fiscal rights classification and to reduce the gap between income & expenditure in local govemment.How to solve these problems? This paper proposes some advices:a) continue to implement the structural tax reductions; b) authorize the local government to issue debt instrument independently; c) add up expenditures on public products and service; d) deepen the reform of tax-sharing system to ensure the local government has more power to share tax revenue.