A Study On Horizontal Fiscal Transfer Payment System In China

Since the policy of reform and opening up, economic and social development amongregions has been becoming increasingly imbalanced when China’s economy develops inhigh speed. In2005, fifth plenary of the sixteen session proposed a new reform proposition,that is, equalization of public service. In2012, The eighteenth National Congress of CPCpointed out that it’s necessary to accelerate taxation system reform, set up a system thatmatches the central and local financial resources, improve the equalization of fundamentalpublic service as well as the construction of public finance system on the main functionalareas.The appropriate financial supply financially guarantees the realization of the basicpublic service. Furthermore, the goal of public service equalization requires the achievementof government fiscal transfer payment system. Therefore, the reform and improvement ofgovernment transfer payment system has become the focus of scholars and the public. Thetransfer payment system established in1994has distinct signs, which guarantee the localgovernment and affect the achievement of equalization goal in light of the principle of"incremental adjustment, the stock sustain". The distinguished financial system refers tonarrow the regional gap by means of redistribution and the establishment of horizontaltransfer payment system which means the rich areas aid the poor areas. Then, an importantcurriculum, that is, the goal of fundamental public services equalization is graduallyachieved.Horizontal financial transfer payment in China is a relatively new research. Althoughpeople from all walks of life have gradually realized the importance of this system in recentyears, the study on this issue is fragmented, preliminary. The full horizontal transferpayment system should include the following contents: the ethical basis, legal basis, thecontent system, the implementation standards, sources of funds, performance evaluation,organization system and supervision system, and so on.This paper firstly discusses the relationship between horizontal transfer payment and the equalization of basic public services as well as the inherent mechanism that horizontaltransfer payment promotes the equalization of basic public services from perspective ofwelfare economics. Then the mathematical model on horizontal transfer payment andregional economic growth is set up by using the multiplier theory of horizontal transferpayment. What’s more, an important conclusion has been drawn, that is, the relationshipbetween regional equalization of basic public services and horizontal transfer payment iscompared to "Tao" and "Qi". In addition, the mechanism of horizontal transfer payment caneffectively make the basic public services among regions development in equal way. On thebasis of correlation coefficient, difference coefficient, Theil index and other statisticalindicators in statistics, this paper mainly analyses the equalization effect of China’s currenttransfer payment system in order to prove the necessity of establishing horizontal transferpayment in China and explore the coming innovation room and innovations of horizontaltransfer payment. Then, the thesis focuses on the feasibility of setting up horizontal transferpayment system in china in terms of legal, ethical and practical basis. The sixth chapterconstructs the basic framework of horizontal transfer payment system in China which is thecore part of this paper. The basic framework of horizontal transfer payment includeshorizontal transfer payment status, objectives, content system, organization system,supervision system, running system, performance evaluation, and so on. Firstly, it defines thestatus of horizontal transfer payment in the transfer payment system. According to differentfunction of vertical and horizontal transfer payment, this paper explores a crisscross patternof transfer transfer payment system, that is, transfer payment gives priority to horizontaltransfer payment. Secondly, it defines the goal of horizontal transfer payment is to achieveequalization of basic public services among regions. Thirdly, this chapter constructs a contentsystem of horizontal transfer payment at the present stage of our country, including two levelsof horizontal transfer payment, that is, ecological compensation and basic public serviceequalization. The goal of different levels of horizontal transfer payment is the same, that is,realize the equalization of basic public services in different regions. However, they havedifferent principles, operation patterns as well as platforms that require to design according operation model, standards of implementation, sources of funding and the organizationsystem. Finally, according to content levels of horizontal transfer payment, the performanceappraisal system is designed, which not only embodies the fairness and efficiency ofappraisal system, but also reflects political intentions and follow the economic law. Because itis a systematic project to establish horizontal transfer payment and needs the relevantsupporting measures timely, the last chapter elaborates it from four aspects, which refer tothe perfection of vertical transfer payment, finance, legislation as well as the governmentassessment system.