Ideas, To Further Improve The Tax System Reform In China

Since the establishment of our nation-state in 1949, the fiscal management system in China has experienced several reforms, of which the reform of tax distribution system in 1994 is the most important one. Through this reform, new fiscal powers, administration affairs and transfer system have been established, which indicates that the fiscal management system in China has been changing in the direction of adapting to the modernization of market economy and continuous improvement.However, there are still some problems during the actual operation of China's fiscal management system in the context of tax distribution system.In terms of the division of administration powers and responsibilities between governments:First, there is offside and absence coexisting in governmental functions. Second, China's current law make division of inter-governmental expenditure responsibilities only by principle, so it is not clear and lack of operability. These lead to blur division of administration powers and responsibilities between governments.The division of revenues between governments is not reasonable. For example, the division of tax revenue is lack of clear legal protection; the division of tax types is not scientific; the distribution of tax revenue between governments is not reasonable; the main tax types in local especially under-province governments are not obvious and the revenue scale is very small, which causes local expenditures especially in the economically undeveloped regions overly depend on the transfer payments by higher levels of governments and local non-tax revenue.The transfer system is not perfect. There are problems both in general and special transfer payments and in tax return. In addition, the supervision of transfer funds is not enough.The City-Governing-County system increases the administrative costs of China's fiscal management system, and it also reduces administrative efficiency and increases financial burden. It results in oppression of county finance and deviates from its original purpose of promoting the development of county economy. Moreover, it creates a false impression of urbanization to some extent and inhibits the process of urban-rural integration in economy and society.First of all, the paper defines some concepts like administration power, fiscal power and financial capability preliminarily and their division criterion through introducing related theories about the division of administration powers, the division of tax and the transfer payments. Then, the paper research the contents, the effects and the weak points of previous fiscal management system reforms since the establishment of our nation-state by the way of sorting of history, in order to grasp historical reasons for the problems of the fiscal management system in China. Next, starting from the division of administration powers, the division of tax, the transfer payments and the City-Governing-County system, the paper analyzes the existing problems of the fiscal management system for these four areas. Furthermore, on the basis of foreign experience of the division of administration powers, the division of tax and the transfer payments, the paper proposes some ideas about how to further improve the reform of tax distribution system and corresponding measures.The theoretical significance of this topic is as follows:from the analysis of what are the causes of the existing problems of China's fiscal management system, the paper puts forward some solutions in attempts to provide certain theoretical reference for the reform direction of fiscal management system in the context of tax distribution system, and to promote relevant theories of perfecting the tax distribution system reform.