A Study On China’s Local Fiscal Sustainability

The issue of local fiscal sustainability has always been the core content of the fiscal revenue and expenditure operation from the central to the local level,and it is also a difficult point in the previous reforms of the central and provincial fiscal systems.At present,local fiscal revenue growth continues to slow down,while expenditure growth remains rigid,and the sustainability of local finance has become the focus of attention of all sectors of society.In fact,under the rigid constraints of local fiscal expenditure growth,the primary and essence of local fiscal sustainability issues is the matching and balance between income and expenditure.This paper uses the panel data of 30 provincial-level local governments in China from 1996 to 2017,and divides local fiscal revenue into three categories:local tax,central subsidy and local non-tax income,making the provincial financial data more consistent with the logic of China’s fiscal system reform,the actual operation and the government’s main behavior,which also helps to clarify the outline,structure and adjustment logic of local fiscal sustainability issues and the heterogeneity between them.At the same time,based on the benchmark model of local fiscal sustainability measurement,the whole sample and regional samples are separately tested for the matching balance between local taxation,central subsidy and local non-tax three types of local fiscal revenue caliber and expenditure,that is,using panel co-integration test verify the revenue and expenditure relationship,and use the dynamic least squares(DOLS)method to estimate the long-term co-integration coefficient.Finally,using the panel Granger causality test,the causal relationship between the local fiscal revenue and expenditure is tested separately for the whole sample and regional samples,and the sustainable heterogeneity adjustment and balance mechanism between local fiscal revenue and expenditure in different regions is preliminarily identified.The empirical results of co-integration test and long-term co-integration coefficient estimation show that the provincial fiscal in China is relatively strong and long-term sustainable,and its basic form is the local fiscal revenue of "national tax as the nain body and non-tax as the balance" to guarantee the three-rigid local fiscal expenditures of eating,running and basic livelihood.The sustainability of the eastern,central,western and northeastern regions is obviously heterogeneous,as shown by the fact that the eastern region is endogenously self-sustainable,the central region is endogenous and externally sustainable,and the western and northeast regions are external sustainable form.At the same time,the Granger test results show that the whole country and the eastern region is a non-tax revenue-based reverse local fiscal sustainable adjustment mechanism,the central region is a central subsidy-based adjustment mechanism,the western region is a regulatory mechanism that relies on central subsidies and has no autonomy,while the regulation mechanism in the northeast region is still unclear.The main research conclusions and viewpoints mentioned above are not explicitly mentioned in the existing literature,and are a useful supplement.