Study On The Local Fiscal Difficulty In China

Fiscal difficulty refers to the difficult situation in the process of fiscal performance, which formally, is the unbalance of fiscal revenue and expense, while practically, is that the fiscal functions run badly.The fiscal difficulty in our country means various difficulties arose in the fiscal performance of different districts. Local fiscal difficulty in China becomes the hotspot after the tax distribution system reform in 1994. Because the tax distribution system reform just divides the fiscal power and the public administration power between central government and provincial government, the saying of "Governments of different levels have its own revenue", for the governments of four levels, is just in name. In practice, the higher level government undertake the task of fiscal administration to one, or even two lower levels. Because the strong links between the local government of different levels, it is hard to find the real reasons of one level's fiscal difficulty by just analyzing the situation of itself. As a result, although the present fiscal difficulty appears mainly in county and town levels, when discussing the local fiscal difficulty, this article considers the fiscal situation of four level governments, including province, city, county and town levels. Study of the main reasons for the local fiscal difficulty as well as offering policy suggestions are the main contents of this article. This article includes four parts.The first part is the opening, which introduces the background, contents, relative researches and methodology, as well as the innovation of this article.The second part is the basic idea of fiscal division and that of local fiscal theory, which briefly introduces the logical premise of local fiscal—division of administration power. On this basis, comes the introduction of relative theory of local fiscal science..The third part, including Chapter Three to Chapter Five, is the main measures to mitigate the local fiscal difficulty. This part begins by analyzing the big former fiscal reforms arose from heavy fiscal stress, which hints the long-standing fiscal difficulty in China. Chapter Four depicts the present situation of local fiscal addministration. Chapter Five theoretically as well as practically analyses the reasons for the local fiscal difficulty. The fourth part is the main ideas for mitigating the local fiscal difficulty in China, including Chapter Six to Chapter Nine. Chapter Six, from the angle of increasing fiscal revenue, put forward the idea of increasing fiscal revenue by economic development. Chapter Seven, from the angle of restricting expenses, put forward the idea of restricting expenses by setting up limited government and limited fiscal revenue and expense. Chapter Eight, from the angle of standardizing the relationship between governments of different levels, put forward the idea of clarifying the fiscal revenue and expenses responsibilities of governments of different levels and the idea of transfer payments system. Chapter Nine, from the angle of improving management, put forward the idea increasing the efficiency by improving the fiscal management level.