The Reform Of Fiscal & Taxation System In The Circumstance Of New Urbanization In China

During the thirty years of Reform and Opening, outstanding accomplishments have been achieved in the urbanization progress of China, and simultaneously, lots of problems also emerged however. In order to solve these issues, a human-centered new urban construction plan that takes the comprehensive, coordinate development as the fundamental target was formulated by central government. Currently and in the near future, Actively promoting the urbanization is a basic and critical project in the development of Chinese economy, and also an important measure to advance the continuing development of both economy and society. As a fundamental component of the national governance, fiscal and taxation system plays an important role during the advancement along the path of sound and ordered urbanization progress. Taking the promotion of national governance and its capability as the logical start point and targets, Modern fiscal governance regard rule of law, separation of powers, equity and efficiency as basic principals. Through scientific and standardized, open and transparent budget and financial management activities, modern fiscal governance is also a determined overall rule system interactively applied to differentiate and govern the relationships among the government-market, society-society, government-government, the government-the taxpayer system.As the current taxation system, the implementation of revenue sharing policy leads to the mismatching of basic elements of the local government, such as:powers, expenditure responsibilities and financial resources. This taxation system also results in other severe issues like:the division paradox between central and local tax power, the irrational tax structure, the improvement-needed transfer payment system, and the excessive financial levels. As a result, the financial resource of local governments is insufficient, which makes issue of the’land finance’centered urbanization operated by local government emerged. The heavy tax burden on the SMEs (Small or Middle Enterprises) weakened the industry support to the urbanization. Not enough employment opportunities make people cannot earn reasonable income to improve life levels and transform from’farmers’to’citizens’. The flourish of the’land finance’centered urbanization leads to the lack of public service however, and the industry development is also quite weak. And even the’ghost towns’, where lots of apartment built while no people live there, emerged in some areas of China. This kind of urbanization certainly betrayed the scientific path and essential requirement of the new urbanization plan that should be comprehensive, coordinated, and sustainable developed.To solve the issues emerged during the urbanization introduced above, a modern tax system should be proposed and implemented in order to match our modernization of governance system and governance capacity. Based on the principals including rule of law, separation of powers, transparency, fairness and efficiency, the new proposed tax system was composed by modern revenue-sharing system with clear responsibilities and rights, standardized and transparent budgetary system, modern tax system with properties including fairness and the rule of law, and a structure optimized, efficient expenditure system. The basic measures of the new proposed tax system including:scientifically divide the financial levels, and construct a financial system that is coordinate with government basic elements including:powers, expenditure responsibilities and financial resources; optimize the tax structure and improve the local tax system so that all levels of government could obtain stable revenue; achieve the true "full bore" dynamic budget management with high quality. Issue the debit right to local governments. Establish an open and transparent payment, transfer system. Strengthen the supervision of taxation, and promote the construction of the rule of law and taxation; implement expenditure reform with equal effort paid to the stabilization of size, the adjustment of the structure and the improvement of efficiency. With the implementation of the new tax system, the urbanization will be progressed according to the scientific rule of development. Industries will be well developed in this process and people could be employed and live a better life. Furthermore, as a breach, the reform of tax system will also push forward the reform of administration and political system of China.