The Research Of Establishing The Local Government Main Tax Category

In1994, China implemented the tax sharing system reform, based on dividing the fiscal power and administrative authority between the central and local government, also making the tax revenue in the division dependant on the taxes division. This tax sharing system reform has guaranteed the central financial income and enhanced the macro control ability of central government which promotes the development of market economy. It also makes the production of a formal real sense of local tax system and standardizes the distribution relationship between different government levels. But the tax system reform based on the generated local tax system has not fixed into a complete form, the main problems of the tax system reform include:the local tax revenue is small, short of effective main taxes, the existing local tax reform cannot meet the society development demand, lack of enough local tax legislative authority, the central government hold the most local tax authorities, local governments have little independent power to adjust the tax policy. The existence of local tax issues have raised the financial district, the ability to control the region’s economy cannot play a full and timely and effective manner, and constraint local government to fulfill its functions. The local government can only look for other outside legal or illegal channels to raise funds to meet the expenditure needs which lead to a series of economic and social issues. Improving the local tax system is an effective way to resolve these issues. The principle problem in the local tax system is short of main taxes. At present, the tax’s base is not stability, independence and sustainable, the growth of local tax revenue is also lack of system guarantee. As a result, the local finance income is not stable which seriously influence local authority to fulfill their duties. Therefore, in order to improve the public finance and local tax system, it is quite necessary to establish the main tax category of the local government.In this paper, the author uses innovative research methodology, combines qualitative analysis with quantitative analysis. Firstly through the theoretical analysis of main tax category of the local government, the author analyses the common principle of the tax category division, the characteristics of the local government main tax category. On this basis, the author analyzes the condition of the local government main tax category in our country, through researching the tax income structure and studying the present situation. Then the author proposes the local government main tax isn’t clear in our country at present, and points out its reasons. Then the author selects some examples to introduce the foreign local tax structure and summarize the experience from other countries and our own politics and economic system. Through the above discussion, the author proposes the overhaul concept of establishing the main taxes:it must embody the principle of low tax rate, broad tax base, simple tax system, strict tax collection and administration. Its purpose is to serve the market and meet the needs of public, make the taxes can play a more important role to boost and guide the local economy development. The author analyses the viability of several taxes to be main local tax from two levels local government. Then suggests the reform direction of some taxes and advises to carry on some reform in political and financial system to ensure the local taxes reform runs smoothly.