Research On The Impact Of Fiscal Decentralization On Local Expenditure On Basic Public Services

There are some problems in the fiscal decentralization structure of our present stage,which are embodied in the fuzzy power,the fiscal revenue and expenditure responsibility of the level government can not effectively match,etc.Correspondingly,under the current financial system,basic public services account for a small proportion of the total expenditure of local governments,and there is an obvious bias in the fiscal expenditure structure.Through the empirical effect analysis,this paper tries to demonstrate the causal relationship between the two,that is,the effect analysis of fiscal decentralization on local basic public service expenditure.This paper shows that China’s fiscal decentralization system has an effect on the expenditure of basic public services in two aspects: fiscal power and expenditure responsibility imbalance and vertical fiscal imbalance.The effect of the imbalance between fiscal power and expenditure responsibility on the expenditure of local governments on basic public services is mainly reflected in the following aspects: due to the downward transfer of expenditure responsibility,the expenditure of local governments on basic public services increases in nominal terms.However,in fact,the unbalanced distribution of governmental powers among different levels has resulted in the basic public services enjoyed by citizens from the central and local levels of government being lower than the theoretical level.The effects of vertical fiscal imbalance on local government expenditure on basic public services are mainly reflected in the following aspects: First,vertical fiscal imbalance leads to local government expenditure more inclined to economic construction input,and tends to fiscal investment that can increase local GDP and increase local tax expenditure in a short time.Accordingly,local governments’ competition for financial allocation enhances the distortion of the expenditure structure,which leads to the low proportion of local governments’ expenditure on basic public services and the inadequacy of basic public services.Second,the government transfer payment system is not perfect,resulting in the unreasonable distribution of transfer payments,can not correct the vertical fiscal imbalance in time,and aggravate the unreasonable degree of local government expenditure structure;Third,irrational investment by local governments has become more and more serious in recent years.The central government’s detailed planning of fiscal expenditure budget fails to effectively curb irrational investment by local governments.Local governments constantly expand government investment by means of local government bonds,land finance and other means,which again reduces the financial expenditure of local governments on basic public services.Finally,the limitation deviation of fiscal decentralization and other institutional reforms and the lack of local fiscal expenditure supervision will again lead to the negative impact of the current fiscal decentralization structure on the expenditure of local governments on basic public services.In this paper,the dynamic panel threshold regression model is used to analyze the theoretical conclusions.The empirical data agree with the theoretical analysis.Although the imbalance of authority and expenditure responsibility leads to the decline of the basic public service level of residents,the downward transfer of authority and expenditure responsibility leads to fiscal decentralization on the surface,which is an important factor for the improvement of local basic public service expenditure.At the same time,the results show that vertical financial imbalance has negative correlation with local basic public service expenditure.From the data conclusion,vertical financial imbalance is the main factor leading to the distortion of local government framework and the insufficiency of local basic public service expenditure.Combined with normative analysis and empirical test,this paper tries to put forward policy suggestions in the face of the deficiencies of the current fiscal decentralization system,and believes that the current fiscal system reform should intensify efforts in the reasonable allocation of intergovernmental powers,reasonable division of expenditure responsibilities,and reduction of vertical fiscal imbalance.