Comparative Analysis Of Fiscal Disparity Among Regions In China

It's necessary to reduce economic and fiscal disparity for constructing harmonious society. The sixth session of the sixteenth central committee of the communist party of China pointed out: "Perfecting the public fiscal system, and achieving the equalization of the basic public services among regions in China". There is very important realistic meaning to analyze the fiscal disparity among rigions in China. This research is designed to explore the factors which affect fiscal disparity and thus put forward some in-depth measures to reduce the fiscal disparity based on the previous analysis .The main parts of the paper are:1. Chapter2 measures the evolution and present situation of fiscal disparity in China by means of several statistical methods. Via the viewing angles of quantity, the fiscal disparity of China is high and expands gradually. Internal disparity of eastern region is the maxium and the second one is disparity among all the three regions. Via the viewing angles of structure, we measure the comparative contribution of each income source to overall fiscal disparity in China using Shorrocks'disparity-decornposing method. The final result tells us that the comparative contribution of general budget revenue ,which accounts for 50% , is more than others. Tax revenue is the main part of general budget revenue, however, its proportion declines gradually, especially in central region.2. Chapter3 analyzes various factors which may affect fiscal disparity, incuding economic factors, policy factors,management fators.etc. The conclusions are as follows: First, large disparity in levels of economic development and economic structures may lead to different revenue-generating capacities. In the east, fiscal revenue and regional economy has formed a cause-and-effect relationship of a virtuous circle. Second, the system of revenue sharing and tax revenue return are more conducive to increase fiscal revenue in developed regions. Third, regional-oriented economic development policy and the corresponding preferential tax policies favored provinces of eastern and western regions.3. Chapter4 selects a set of variables represent economic and policy factors, builds multi-regression models, analyzes the impact of various factors on fiscal disparity. The empirical results indicate that among all these statistically significant factors, GDP per capita is the most important variable that affect fiscal disparity, with a total contribution of 64.98%. Other factor such as economic structure also plays a very important role, while the comparative contribution of policy factors is about 15%. Based on the previous analysis,in order to decrease the fiscal disparity among regions in China, the most important measure is to reduce the economic disparity. At last, the paper put forward some policies and mesures to reduce fiscal disparity among regions.Novelties in this paper are: First, we find that in the east, fiscal revenue and regional economy has formed a cause-and-effect relationship of a virtuous circle, while the interaction isn't so significantly in the central and in the west. Second, we build a multi-regression model to analyze the factors which affect fiscal revenue and point out that among all the factors, GDP per capita is the most important variable, so in order to decrease the fiscal disparity among regions in China, the most important measure is to reduce the economic disparity.