The Enlightenment And Reference Of German Financial Transfer Payment System To China

Since the reform and opening up,China's financial relation between central and local governments has experienced from a highly centralized fiscal system with unified revenue and expenditure to the system of tax distribution.The Fiscal System Reform in 1994 has determined the division framework of financial authority and expenditure responsibility of central and local governments.With deepening the comprehensive reform,many social and economic problems caused by the irrationality of this division framework have become increasingly prominent.Undoubtedly,the new tax distribution system is effective that has increased the central financial resources and improved the central macro-control capacity,but "central orders,local pays" has also resulted the local government into a dilemma of extremely non-uniform of financial and administrative authority.Local governments tend to avoid central direct control and increase local revenue in the way of expanding land finance and increasing local debt,but it has buried "hidden bombs" for the local finance.After 2011,the financial relation between central and local governments has met new situation that local fiscal revenue has exceeded over the central once again.In accordance with the 13th Five-Year Plan to promote fiscal reform,it is foreseeable that the next work of central government would have to focus on the issue of division of financial and administrative authority between central and local.And today,China's regional economic differences cannot be ignored anymore that the binary regional competition between East and West has evolved into the competition between four regions.Generally,in order to continue deepening the political and economic system reform,completing goals of the 13th Five-Year Plan and improving quality and efficiency of public services,the vertical and horizontal financial imbalance problems of China must be faced and solved.Fiscal transfer payment system is established to adapt to changes in the economic and social development environment and coordinate intergovernmental interest conflicts.The implementation of the fiscal transfer payment system can effectively narrow the gap of financial resources between regions,implement the central macroeconomic policies and enhance national cohesion,is a powerful means to solve vertical and horizontal imbalance problems.Over the years,China's financial transfer payment system has been continuously improved.Its expenditure scale continues to expand,its structure is optimized,the distribution method tends to be scientific and the ability of dealing with intergovernmental contradictions and conflicts increases.However,China's current system that consists of tax return,general transfer payments and special transfer payments is the simple vertical financial transfer payments between central and local and has many issues like unreasonable structure,unscientific measurement method,incomplete legal and supervision mechanism,ineffective incentives and equalization etc.In contrast,the German system is the world's more mature financial transfer payment system.The German fiscal transfer payment system was originally established to balance the unification of the East-West economic differences,based on a complete tax system and a sound legal system.Now it is the powerful promoter to achieve two major financial goals of Germany,namely,equalization of public services and fiscal balance.However,the German system is not perfect and has been optimized its own in many reforms.We should learn this spirit of the pursuit of improvement so that China's financial transfer payment system could evolve in the current economic reform.Based on the content of the German system,this paper analyzes and summarizes the advanced experience of the German system,and then offer proposal according to the present situation of our system.This paper includes five parts:First,it briefly discusses the theoretical basis and necessity of implementing the financial transfer payment system;Then,it introduces the three bases of establishment of the German system,namely,the German tax system,the division of administrative authority and the legal basis;Furthermore,it introduces the five-level vertical and horizontal fiscal transfer payments process of Germany,including federal income distribution,interregional income redistribution,interstate fiscal balance,federal supplemental appropriations and intraregional fiscal balance;Next,there is a brief analysis of China's central and local financial status and the status of China's financial transfer payment system;Finally,after comparing the content and effect of the financial transfer payment system of two countries,it is found that China's system has institutional problems,structural problems,distribution problems,regulatory issues,incentive problems and effect problems that could be solved by getting useful reference and inspiration from German system.The purpose of this paper is analyze the German system and make suggestions on the reform of China's fiscal transfer system so that the system could more consist with China's national conditions and development needs and become a significant part of fiscal and tax reform.