Font Size: a A A

Improvement Of The Current Financial Management System

Posted on:2008-02-25Degree:DoctorType:Dissertation
Country:ChinaCandidate:Z Y WangFull Text:PDF
GTID:1119360242968797Subject:Public Finance
Abstract/Summary:PDF Full Text Request
It has been 12 years since China began to implement the tax sharing system in 1994. It convinced that the tax sharing system whose main content is decentralization, tax sharing and classification Management conforms to China's national practical conditions and has played a positive role in improving the fiscal status of central government, promoting economic development and arousing the financing enthusiasm of the local government. Generally speaking, the operation of the system is good. But we must also recognize that it is just a transitional regime not touching the original vested interest structure and there is still a big gap with a scientific, regular and sound fiscal system. Along with the continuous deepening of china's market-oriented reform, Local governments are playing increasingly important roles in providing public goods and public services, coordinating local economic and social development. As the chief representative of regional public interest and administrative body, Local government has relatively independent interest and more power and ability to act independently, they have increasingly become governmental organizations with the clear border of interests, instead of central government's accessory agencies. Under such circumstances, it is urgently needed to discuss effective ways to coordinate the relationship between central and local governments in financial distribution.I Background of subject selection and practical significanceResearch on fiscal management system is somewhat platitude but still a very important topic. Firstly, fiscal system is the core of all finance related issues. Only by defining clearly the inter-governments financial relationship can better solve other problems. (Like one is outline, the others are items) secondly, China's existing tax sharing system needs to be reformed urgently. Since started in 1994, it has been followed by the evils of former system. "Base" signs there are certain marks of the "Financial responsibility system", "centralization" and "proportional participation" sign the possibility to return to the old one. This kind of Chinese characteristic taxation has to be reformed to advance with times. Thirdly, fiscal system study needs to be deepened, especially in the field of empirical analysis on provincial-below fiscal management system.Existing literature shows there are rich results in the fiscal management system studies. Still it is what the thesis focuses, for its especially significant in practice. First of all, improving the existing fiscal system is a realistic choice of solving the grass roots financial difficulties, China began to implement tax sharing system. in 1994, after more than 10 years' practice, it has been proved that it has realized the original intention of increasing central government's fiscal revenue and strengthening macro-control capacity Following data shows that , the central financial revenue accounted for 22% in the national fiscal revenue in 1993 and for 54.2% in 2004, with an total increase of 32.2% in 11 years. Meanwhile, local financial revenue in the national fiscal revenue, declined from 78% to 45.8% from 1993 to 2004, with an average decline of almost 3% per year. Based on the author's working experiences in provincial finance departments for 10 more years and thesis' preliminary study, the author judges that the continuous improving of central-government's financial strength contains continuous worsening of grass roots government's . Whoever started the trouble should end it. Rational division of the financial power and responsibilities of grass root government is an important choice for paying the wage arrears to teachers and civil servants, eliminating government debt in county and town level, and strengthening the functions of providing public service of county and township government. The second, to perfect China's current fiscal system is a basic way to solve the "three problems about countryside agriculture and farmers". From financial perspective, the "three problems about countryside agriculture and farmers" is the aftermath of long-term operation of urban and rural "dual finance" ,which is caused further by the imbalance of intergovernmental fiscal distribution—the imbalance between grass roots governments representing countrymen' interest and central government representing townspeople's in financial resources distribution. The reform of existing fiscal system is the key point to solve the "three problems about countryside agriculture and farmers" effectively. The financial powers and responsibilities of central and local governments must be re-defined under unified model between urban and rural areas. The third, improving our current fiscal system is an important means of implementing the scientific concept of development. Under the circumstances of market economy, the government has to burden its political, economic, social functions, and correspondingly, to fulfill its basic duties of resource-allocation, income-distribution, economic stability and development etc. different levels of public goods determine the responsibility scope of different levels of governments. According to general rules, central government is mainly responsible for economic stability and social distribution and local governments for resource-allocation, However, the reality is that local governments dominate the market economy, invest blindly, construct repeatedly and over occupy agricultural land , resulting in the depletion of resources and energy crisis, environment crisis, and so on. The root laid in the fact is that there are too much "fiscal responsibilities" left in current fiscal system. To ensure the completion of "base" in the system, local governments inclined to invest by themselves and inviting external investments. Therefore, it is an important part of implementing the scientific concept of development to perfect the fiscal management system, and to achieve financial harmony in inter-governmental relationship. The fourth, improving current fiscal system is an important part of implementing the strategy of governance by law. The market economy is ruled by law. It is an important part of implementing the strategy of governing the country by law to construct scientific, democratic, transparent and stable inter-governmental fiscal relationship, in some degree, the current fiscal system is "ruled by men" rather than "ruled by law", and "operated randomly" rather than "operated stably." On one hand, there is no "Intergovernmental Fiscal Relations Act" to restrict the adjustment of financial power and responsibilities by higher leveled governments to the lower leveled, and People's congresses at all levels can not function very well in the process. On the other hand, the existing transfer payment system is obviously transitional. There is an urgent need to strengthen the level of "ruled by law" to make the transfer payment system more scientific, democratic, transparent and performance-oriented.In short, in the process of china's economic transition from planned economy to market economy, Along with the establishment of socialist market economy system and the enhancement of the role of micro-operational mechanism, "function offside", "function absence" will gradually be solved, the adjustment of the government fiscal structure has become an inevitable choice.II The structure and major issues to study of the thesisThe thesis is divided into eight chapters:Chapter 1: The outline of fiscal management system. It mainly focuses on general problems of fiscal management system, including its basic concepts, features, contents, effects, theoretical basis, constraints, operational mechanisms and etc.Chapter 2: Historical review of fiscal management system. The thesis introduces and comments curtly on the historical evolution of China's fiscal management system since the founding of our nation: the Planned economy model(unified control over revenue and expenditure),the transitional-period economy model(responsibility system),the market economy model(tax sharing system).Chapter3: "faultiness" analysis of the fiscal system. Analysis on the faults of the thesis doesn't only summarize and evaluate the effects of the tax-sharing system reform from 1994, but also analyses problems existing in governmental "responsibilities", "financial power" and transfer payment system, and then examines and reveals some characteristics of "system regression" existed in current fiscal system.Chapter4: International comparison on the fiscal system. Take United States, Germany, France, Japan, India and other countries as examples, It Introduces different experiences on division of intergovernmental responsibilities and financial power, transfer payment system in different countries.Chapter5—Chapter8: Basic ideas to perfect China's current fiscal system. Chapter 5 discusses mainly the ideas and methods of division of intergovernmental expenditure duties. Chapter 6 focuses on ideas and measures of intergovernmental revenue division. Chapter 7 focuses on ideas and measures of improving the intergovernmental transfer payment system. Chapter 8 focuses on ideas and measures of pushing forward other related reformIII Innovations and deficiencies of the thesisGuided by dialectical materialism and historical materialism, the thesis analyzes systematically the theoretical and practical issues on the perfection of China's fiscal management system. Starting from basic theories concepts and drawing on existing research achievements, the thesis exercises the basic principles of economics, political science and sociology synthetically, whose main innovations are as follows:Firstly, there are innovations on the "faultiness" analysis of existing fiscal management system, mainly in Chapter 3, which proposes and discusses concretely that existing fiscal management system trends to come back to the old one. for example, excessive use of tax-sharing models may caused objective reality for returning to the old "proportional participation " The situation of much smaller size of local tax and too mush transfer payments leads to the tendency of old "unified control over revenue and expenditure". Fiscal system below provincial is imperfect and grassroots leveled finance may exists in name only. This is not an aggrandized judgment. There are indications that uncompleted reform of the tax system in 1994 lead to a series of problems,Secondly, there are innovations on the integration of government financial resources, mainly in chapter 4. In a long time, the problem of national policies inclined to be converted to departments' ones has failed to be properly solved. By granted authority and legislative resources some governmental departments emphasize too much on their powers while neglects corresponding responsibilities when drafting national laws and administrative regulations, reflected in national finance, some governmental departments participate in redistribution of national income as the status of second finance. As a result, government financial powers are decentralized in different departments. Hidden behind the large number of non-tax income are departmental interests. The problems further result in that, firstly ,limited financial resources are scattered and operated inefficiently, secondly, the unity and integrity of national budget is greatly undermined , thirdly, the contradictions between local governments be worsened ,and lastly, the efficiency of fiscal funds be greatly reduced. So, the thesis points that the unity of government's financial power is an indispensable prerequisite for improving the intergovernmental financial relations.Thirdly, there are innovations on data-collection and information application. The thesis collects large number of economic and financial data on the issue of financial management system, and reveals problems and phenomena through data analysis, avoiding on the theory of theory and viewpoints of viewpoints study on such issues, to some extent.Fourth, there are innovations on comprehensive use of various research methods. The thesis comprehensively uses empirical and normative analysis, individual and aggregate analysis, qualitative and quantitative analysis, historical and reality analysis to expound and prove many issues and phenomena on the topic of fiscal management system.However, the research on fiscal management system related to the political, economic, social and other more subjects. Restricted by the author's research capability, methods and time, there are still many deficiencies in the thesis. Firstly, the author has completed basic theoretical research almost by learning from others, and hasn't made great breakthroughs, Secondly; the application research needs to be deepened, especially in design of problem-solving mechanism. Thirdly, the design and application of the research model also need to be deepened further.
Keywords/Search Tags:Fiscal system, Historical review, "Faultiness" analysis, Reform of measures
PDF Full Text Request
Related items