Studyon Equalization Effectof Fianacial Transfer Paymentsbased On The County

The differences of economic at the county level will lead to the different ability of providing public services,which will affect the fairness and justice of the society and the full realization of a well-off society.Transfer payments play an important role in balancing the financial gaps between regions.In this paper,the data of 108 counties in Henan Province from 2002 to 2007 are analyzed to study the effect of transfer payments on the equalization effect of county finance by using the Gini coefficient method in accordance with the framework of “theoretical analysis-current situation analysis-empirical analysis-conclusion and suggestion”.The study found that: Firstly,the provincial financial self-sufficiency rate of Henan Province is basically below 0.5,which is far less than the national average,and it shows a strong dependence on the transfer payments.Secondly,By comparing the per capital income Gini coefficient before and after the transfer payments,the paper analyzes the county-level financial resources and finds that the total transfer payments,the special transfer payments and the financial transfer payments all play the role of reducing the financial difference,and the tax return is very limited for the reduction of the Gini coefficient,what's more,it also further widened the financial differences in 2002-2004.Thirdly,Through the decomposition of the Gini coefficient,it is found that only the financial transfer payments play a role of balancing local financial resources,and the level of fiscal revenue,total transfer payments,special transfer payments and tax returns all played a role in non-equalization.Although the financial transfer payments have a strong equalization effect,but it can not make up for the non-equalization effect caused by special transfer payments and tax return.Finally,by further decomposing the Gini coefficient,it is found that the unequal distribution of funds is the main reason for the nonuniform effect of transfer payments.Based on the above analysis,this paper proposes the following policies and recommendations: Firstly,improving the transfer payment system.Such as clearing the division of financial and administrative rights and so on.Secondly,optimizing the allocation of transfer payments.Such as gradual eliminating the tax return policy through reforms;regulating the allocation of special transfer payments;strengthening the scale of financial transfer payments and so on.