A Study Of Chinese Equalization Transfer Payments System

This paper applies mathematical statistical and interpretational analyticalmethods, first defines the basic concepts and problems involved in the fiscal transferpayment system, and analysize the transfer payment system effect in equilibrium thegovernment's fiscal capacity, then reviews the development process of Chinesetransfer payment system, proposes the principles to establishment the equalizationtransfer payments system and the basic idea of how to improve the equalizationtransfer payments system.The basic conclusion of this paper is: local government fiscal revenueequalization had been substantive improved after receiving from the central budget,but the equalization effect of transfer payment system in local government fiscalexpenditure was not so obvious. It can be said that the existing system of transferpayments tend to the balanced role of the local government fiscal revenue, but ignoredthe role of the system of transfer payments in local government fiscal expenditure. Infact, the equalization transfer payments system determination should been consideredthe double standards of the local government fiscal revenue and public goodsexpenditure needs.The equalization transfer payments system should be designed around two basicpoints, including the standard of local government fiscal revenue and public goodsexpenditure needs, and the standard of local government public goods spending andfiscal revenue restraintion. The Chinese equalization transfer payments system shouldbe designed as the following:(1) Eatablishing the standardized transfer paymentsbudget system;(2) Estimating the local government standard fiscal capacity based onpotential financial capability;(3) Estimating the local government standard fiscalexpenditure needs based on public goods expenditure;(4) Estimating a specialequalization transfer payments funding mechanism for balanced local governmentstandard fiscal capacity;(5) Improving the internal structure of equalization transferpayments in order to balancing local government standard fiscal capacity.