Yunnan Province Under General Transfer Payments Effectiveness

In order to promote the coordinated development of economy and society and theequalization of basic public services, our country reserved settlement subsidy andother transfer payments and gradually established and improved the financial transferpayments system to local governments after the1994tax reform. As a majorcomponent of the government’s fiscal transfer payment, general transfer paymentswas an important mean to narrow the financial gap between regions and to achieveinter-regional equalization of basic public services. With development of economy,people’s requirements on quality of public services become higher and higher, but thewhole public services can’t meet the needs. The central government provides a lot oftransfer payments to local governments every year. With the transfer paymentsincreasing, the investment of key public goods also increased year by year. For such awestern province of Yunnan, the study concerning the effect of general transferpayment on promoting and balancing fundamental public service in Yunnan provinceis not only conducive to better know the effect of general transfer payment finance inYunnan province, but also helpful to offer decision-maker reasonable and logicalreference to make decisions and thus advance the process of public serviceequalization.This paper first digs into the theories on transfer payments domestic and foreign,clarifies the purpose of the general transfer payments, introduces the general transferpayments status quo of Yunnan province to know the level of basic public services,and introduces the construction of general transfer system. Second, the paper analyseswhether the general transfer payments spent on basic expenditure which were centralgovernment hoped with multivariate nonlinear regression models, whether influencedthe basic public services, from which we can understand how much the generaltransfer payments improved the level of the basic public services and how much theynarrowed the regional gap. Then we can find out the problems general transfer payment mechanism. At last, to solve the problems, the paper puts forward somesuggestions to perfect the general transfer payments, and improves a method toevaluate the general transfer payments.