Study On The Impact Of China’s Central Government Transfer Payment On Equalization

In recent years, livelihood issues have been getting more attention and equalization ofpublic services has become the tropism of China’s transfer payment system. When it comesto the issue that how can the transfer payment system realize the equalization of publicservices, there are two transfer payment equalization models in the world: FiscalCapability Equalization and Horizontal Equity Equalization. This paper discusses thetypical application and the applicable conditions of the two equalization modes, Thenbased on the analysis of the policy intentions as well as the present situation and thereforming direction of China’s transfer payment system, it come to the result that Chinawants to adopt the Fiscal Capability Equalization that through transfer payments to realizethe regional financial balance so as to promote the regional equalization of public services.Therefore, this paper start with the studying of the effects of transfer payment on the localpublic services and related mechanisms under the Fiscal Capability Equalization model,then study the impact of the transfer payment system on equalization, and thus to putforward relevant proposals to improve our transfer payment system.When studying the impact of the transfer payment system on equalization, Base onthe collecting of relevant data, this paper mainly used correlation analysis and empiricalanalysis to test the impact of transfer payment system on equalization of fiscal revenue, theimpact of Fiscal Capability Equalization on Public Service Equalization and the factorsaffecting the level of public service which supplied by local government. There are threeconclusions: first, transfer payment system has exerted a positive influence on regionalfinancial equalization degree as well as increasing the degree of equal basic public services.Second, the fiscal capability of local government can significantly affect its level of publicservice; it will be effective to reduce regional differences in the levels of public service bypromoting regional financial equalization. Third, as well as the fiscal capability, the fiscalexpenditure structure will be important impact on the level of public service. Based on the above conclusions, this paper put forward to set up a transfer paymentsystem to contain General transfer payments, Categorical transfer payments and Blocktransfer payments. Promote the financial equalization between regions, and at the sametime guide the fiscal expenditure structure of local government through Block transfer,meanwhile optimizing relevant measures. Make a formalized system of financial transferpayment to realize the equalization of basic public service.