Research On Construction Of Horizontal Transfer Payment System In China

As an important part of a country’s financial system, Fiscal transfer payment system plays an important role in the vertical fiscal balance and the different regions of the equalization of basic public services. In accordance with the financial flow of funds, financial transfer payment system can be divided into vertical fiscal transfer payment system and horizontal fiscal transfer payment system. Since the tax system reform in1994, China has gradually established a vertical transfer payment system, which plays a central role in regulating the financial relationship between the central and local, and making up the local government financial gap.Since the1990s, serious imbalance between economic development in our region lead to imbalance in the regional financial capacity. And cause the disparity basic level of public services across regions. Although our longitudinal transfer payment system has playing an important role in making up of the longitudinal central and local financial imbalances, its horizontal equalization effect is weak, and it’s difficult to effectively regulate the Regional Financial huge differences. Although the counterpart support mechanism has the nature of the lateral transfer payments, it don’t possess the characteristics of a scientific and standardized, and it’s difficult to reach to compensate for regional financial imbalance and meet the actual requirements of equalization of basic public services. Therefore, the researching how to establish scientific and standardized lateral transfer payment system in our country, not only has significant theoretical significance, but also has a strong role in reality.At present, most of the literature is also limited to Why we should create horizontal transfer payment system, as well as whether to establish lateral transfer payment system. However, the demonstration and analysis on how the specific design of horizontal transfer of financial payment system framework and content, as well as the design of the performance evaluation system is still relatively scarce. In order to narrow the financial differences between the regions and to achieve the goal of equalization of basic public services, the paper presents the policy perspectives and recommendations to how to design horizontal transfer payment system.The paper consists of five parts. The first part is the introduction. The second part is divided into theoretical analysis of Lateral transfer payment system. The third section describes the practical needs of the payment system for constructing a lateral transfer. The fourth part describes Germany horizontal transfer payment system and its experience. The fifth part is policy recommendations for lateral transfer payment system.