The Impact Of Central Government Transfer On Public Service Equalization

Central government fiscal transfer is the first level of intergovernmental transfer. Intergovernmental transfer becomes an important system of fiscal equalization and an efficient way of upper government macro-controlling since the 1994 reform of China's fiscal system. Valid transfer system is about to play important roles in uniting local governments' routine power and financial power, public service equalization and balancing economic development. Basic public service equalization is now concerned to be the principal target of intergovernmental transfer. Under this background, this paper analyzed our central government transfer system and public service equalization level, assessed the public service equalization effect of central government transfer, evaluated how much the design of transfer system cared about public service equalization and made some corresponding discussions to improve the transfer system according to the target of public service equalization.Firstly, this paper analyzed the influence of general transfer, tax rebate and category grant to public service equalization through theoretical and mathematical methods, and discovered that the effect of general transfer is uncertain, the effect of tax rebate is negative, and the effect of category grant is positive. Secondly, this paper constructed an index system of public services according to Savas's outcome equalization principle, and then distributed the index in Gini coefficient, and it came out that the inequality of public service is improving. Thirdly, this paper built an panel data model based on 31 provinces in year 2000 to 2008. Panel data model can contain time factor and region feature factor which are not easily observe. This paper used this model to study how government transfer would affect the public service index, and then inferred how government transfer would affect public service equalization. The result proved the theoretical forecast. Finally, this paper studied how much government transfer cared about public service factor in designing process. Based on the analysis above, this paper made some corresponding recommendations on how to improve government transfer system according to the target of public service equalization.