Local Government Revenue Optimization Study Behavior And The Local Revenue System

The income is the financial foundation of the local government to carries out its work, so the local government has the tendency to maximize the income. At the same time, the local government grasps many resources that can achieve such goal. If there is no reasonable income system frame, the local government's income behavior would have prominent negative influence at the society's economy. This article tries to find the flaw of present China's local finance income system through studying the local government's income behavior. And then it will provide some references to optimize the China's local finance income system.The China local government obtains the income under the pre-existed financial system, so there must be a game situation between the local government and central government about the income, which needs analysis. Both The local government and the central government have strong opportunism tendency. The central government has the power to formulate and revise the rule. Moreover it frequently uses such rights to revise the finance and taxation systems, and then achieves its income goal. Therefore the local government lacks a relatively stable income system and has to adopt some opportunism behavior. So the situation as hiding own income to expand income scale outside the system is generally. On the one hand, the central government and local government's opportunism behavior created problems like " the paradox of dividing power " and "unofficially dividing power"; on the other hand, the lowest governments of county or township generally appear to be difficult with income. Therefore, we must nail down the financial system from the constitution and law, and establish a stable income system for the local government, to solve such "Prisoner's dilemma".There also has obvious competition for financial revenue between the local governments. In such game situation, the local governments compete at expanding tax sources and optimizing the industrial structure. Though such income competition is advantageous to restrain the local government to abuse its right and reduce enterprise's tax burden level, but the over-competition will cause the " Matthew's effect " of the unbalanced financial resources level between areas, and cause the convergence of industry structure between areas, even led to the more serious question like regional protectionism and the market division. To reduce the negative influence of local governments' income competition, the key is to change the aspect that present China local government relies its income too heavily on the tax from the productive sector, and to turn it to the non-productive sector, reduces the local government to disturb the market resources disposition the drive. Moreover, we must also reform the assessing mechanism of local government's achievements, reform the surveillance mechanism of local government's financial decision-making, and improve the income condition of these tough areas, change their disadvantageous places in income competition.The local government also expand its income through other methods, such part of income finally comes from to the taxpayer, thus cause the game situation betweenthe local government and the taxpayer. In this kind of game, the taxpayer lacks the basic capacity to response, so the local government would face relatively less restraints in the process of expanding income. The local government is good at using the discriminative income policy to expand income through increasing the tax burden of these taxpayers who are insensitive to their tax burdens or having no chance to move away. At the same time, the local government prone to use the public resource such as the state-owned but non- management property to obtain income, or drive the local house price rising to expand tax revenue from the real estates, or obtain income from its credit, etc. In fact this kind of income finally comes from the taxpayer, and will encroach upon taxpayer's right. Therefore, we must limit such local government's income behavior, reduce the system cause for local government to expand income, and the explore the change of preliminary government's income pattern, reduce the distortion of local government's income behavior, adopt more effective measure to protect personal property rights, and consummate the local government's property right.Base on the studies of the game between local government and central government, and between local government and taxpayer, this article will propose the basic way of analysis on how to optimize the local government's financial revenue system. The first is to establish an asymmetry pattern to divide the tax revenue, confirm a scientific way to divide tax revenue, and increase the preliminary government's exertion to raise principal tax category, and speed up the reform on the property tax system. The second is to clear out the target of the transfer payment, ensure the compensating status of the transfer payment in the local finance income system, furthermore to consummate China's transfer payment system. Finally, we must carries on the determination of the China local government income system from the constitution and legal stratification, strengthen the protection of the local government's principle status and correlation right, then to rationalize and standardize the local government's income behavior.