Research On Building The Local Tax System Of China

From1994tax reform has gone through for20years, the basic structure of tax has been established, and local tax system has its brief shape. Tax reform achieved the goal of " two proportions "in a short time, strengthening central government’s ability of macroeconomic control, stabilizing market and adjusting income distribution and providing national public goods, but also promoting inter-governmental transfer payments improve gradually, establishing the financial management system to adapt to the market economy system, which is the first step to come up with the world. However, the current tax system reform still stays in the first step, not carrying on comprehensively and in-depth. So far it has been unable to meet the needs of the market economy system, exposing a large number of problems, such as lack of local fiscal revenue and consequently caused hidden liabilities, land finance, arbitrary charges, blind investment, waste of resources and other issues. And currently range expanding process of VAT is to speed up, after that the problem where the local government’ revenue comes from can also force to build local tax system and to rethink the relationship between the governments, which is a challenging opportunity. Only though meeting the challenges we can seize the opportunity to thoroughly reform. The party’s18clearly stated requirements of building local tax system, and Premier Li Keqiang requested to clarify the central and local fiscal relations in a scientific, sustainable and transparent way in the government work report at the second session of the Second Session of the National People’s Congress. How to build the local tax system in the new situation has aroused widespread discussion between experts, scholars and the community. So the choice of this subject is focusing on the theoretical basis and the complex national conditions and reality, based on the rigorous discussion and reasonable assumptions of local tax system, concluding with suggestions on local tax system building. The first part is the introduction, introducing the research background and significance, summarizing of prior experts’research results, clarifying wording ideas and structures.The second part discusses the local tax system theory and interpretation. On the basis of defining the local taxes and local taxes system, we firstly describe the necessity of local government and its local public service functions through level of public goods and fiscal decentralization theory, followed by a description of the relationship between public services provision and local taxes, finally, we describe the public services provision requirements for local tax system. In this section we also compare local tax revenues with other ways, concluding that tax is the most effective way to protect the financial and economic regulation functions.The third part is to analyze the situation and problems of current local tax system. In local tax system, the degree of legalization tax power is not high, and there is no fundamental law; local government financial authority powers are not consistent, and exclusive revenue scale of local taxes is too small, local governments lacking the right to self-finance, resulting in income tax revenue over expenditure. Local government choose to do everything possible to find extra income approach, seriously disrupting the orderly financial management system; tax division of different standards is confusing, among the local government tax revenue sharing proportion is too large, lacking effective local main taxes.The fourth part comes up with the prerequisite, legal protection construction principles and tax structure configuration, aiming at the issues raised.