Study On The Main Category Of China's Local Tax System

In 1994, China began to implement tax-distribution financial system reform, primarily established local tax system which adapted to the economic development, and promoted the territorial economy to a certain extent. However, as the system design emphasis on the protection of the stability of the central tax revenue, lack of enough attention to the local government revenues, leading the relationship between central and local taxation distribution to be fuzzy, and problems such as taxes divided unreasonably appeared. But this serie of questions are precisely the main cause to our country unable to clear the main category of local tax system. The main category is the core of local tax system, it provides stable source of income for local governments and ensure the local governments'normal operation. As a result of the vacancy of the main category, local governments can't effectively organize financial income and adjust economy through local tax, seriously impacts on the function performance of local governments and the supply of the local public products, cause the local governments lacking sufficient and stable source of income and solid economic basis, hinder the play of the tax adjustment function, while creating local government short-term behavior, this will bring a lot of adverse impact on the sustainable development of local economy. To establish a scientific and reasonable main category of local tax system, establish the local tax's continuing endogenous growth mechanism, is not only the key to reform and perfect local tax system, and one of the important content to rebuild our local tax system, but also embodies the objective requirements to the further deepening the reform of the taxation system in "the Twelfth Five" period in China. At present the main problem of our country's local tax system is lack of long-term, effective and stable main category, so we need to study deeply to the main category of local tax system, and properly select and cultivate the main category of local tax system. It is imperative.The choice to the main category of local tax system is a theoretical and practical problem, It needs analyzing through integrating many elements and considering in different levels. Meanwhile studying on the choice to the main category deeply, we should integrate theory with practice, broaden our horizons, throw away from the limitation of the system itself, to build a scientific and standardized system of interpretation and evaluation platform. In this article, the author mainly utilized literature methodology, quantitative analysis and qualitative analysis, experience summary research methods and so on, and on the basis of analysis thoroughly and induction, to clear the selection of the main category of local tax system. This paper mainly consists of five components about the research framework of the main category of local tax system:firstly introduces the research background, significance and research methods and ideas. The second part is to analyze the basic theory of the main category of local tax system. Summarize the general rules of tax division through the principle elaborations of Musgrave, Jack M Mintz etc scholars, and clarify the status of our taxes division. Within this section also defines the concept of local taxes, and clarify the connotation and characteristics of the main category, finally analyzes in details the main factors to restrict the category choice:the level of economic development, economic operation mechanism, tax legislative power centralization, government on the taxation policy goals in the emphasis of differences and tax collection level. The third part is the realistic analysis to our main category, through studying on the status of the main category, find that there are some problems such as tax rights unreasonably divided between central government and local government, tax category divided unscientifically, no effective and stable main category in the local tax system, tax structure is not set by specification, tax reform lags behind other issues. And analyze in depth on the reasons for the various problems and shortcomings. In the fourth part, listed the choice of the main category of the local tax system about developed countries, developing countries and countries of transition. And summed up the experience we can use for reference from the practice of states. In the last part, on the basis of the analysis and summary of the former text, before clearing the main category, we should divide the tax rights between central government and local government reasonably, at the same time divide the tax category scientifically and rationally. This premise creates a scientific and harmonious environment for building the main category of local tax system. At the same time, because of the level of economy development, the unperfecting of revenue-sharing of the financial system and other factors, the main category's building can't complete in one step, it should be combined with specific national conditions, follow the general trend of economy development and fiscal reforms, set two short-term and long-term milestones:treat business tax, property tax as the main category of local tax system in the short-term, on this stage continued to remain the main status of business tax, and also should focus on nurturing property taxes as the main category. In the long-term, property tax will be built as the long-term, stable and effective category. While raised the policy proposals on building property tax as the main category of local tax system, put forward corresponding proposals for reform, mainly from real estate tax, travel tax and collecting the heritage tax and gift tax three aspects, provide the main reference on the choice of category for our country.