China: reforming intergovernmental fiscal relations
AbstractSince 1979, the Chinese authorities have made a sustained effort at introducing market-oriented reforms and the results have been impressive in terms of growth and poverty reduction. However, reform of fiscal system has lagged behind. In particular, the system of intergovernmental fiscal relations has been unstable, non-transparent, and inequitable. As the economy moves toward greater market orientation, a rule-based system of intergovernmental fiscal relations will be essential. The paper reviews the theory and experience of multilevel fiscal systems in various countries and makes some suggestions for China. Its basic conclusion is that while recognizing the specificities of Chinese conditions, the Chinese authorities cannot but follow some basic principles of multilevel fiscal systems. Among these are the following. First, international experience in countries big and small, federal and unitary, indicates that the Central Government must have effective control over the most important sources of tax revenue, not only in termks of tax law and policy, but also in terms of administration, collection, and allocation of revenue. Second, taxes should not be looked upon mainly as providers of revenue; they must also be seen as tools of policy that, whether intended or not, affect the allocation of resources and their efficient utilization, interregional and interpersonal distribution, and the level of aggregate demand. Third, while for the sake of efficiency and equity most of the major taxes have to be collected centrally, a considerabled egree of decentralization is required on the expenditure side because closeness to the beneficiary helps efficiency. There is thus a need for designing a system for transfer of resources from the center to the localities, but it needs to be done in a way that is transparent and equitable and gives incentives to the localities to maximize their efforts for revenue mobilization. The paper details the practices followed by Japan, India, Canada and Germany as examples on which China can draw in designing its own system of intergovemmental fiscal relations.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 475.
Length: 98 pages
Date of creation: 1993
Date of revision:
Publication status: Published as World Bank Discussion Papers No.178
Other versions of this item:
- Agarwala, R., 1992. "China: Reforming Intergovernmental Fiscal Relations," World Bank - Discussion Papers 178, World Bank.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ma, Jun, 1995. "Modelling central-local fiscal relations in China," China Economic Review, Elsevier, vol. 6(1), pages 105-136.
- Zhang, Tao & Zou, Heng-fu, 2001.
"The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India,"
China Economic Review,
Elsevier, vol. 12(1), pages 58-81.
- Tao Zhang & Heng-fu Zou, 2000. "The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India," CEMA Working Papers 30, China Economics and Management Academy, Central University of Finance and Economics.
- Andres Rodriguez-Pose & Nicholas Gill, 2005. "On the 'economic dividend' of devolution," Regional Studies, Taylor & Francis Journals, vol. 39(4), pages 405-420.
- David Wildasin, 1996. "Introduction: Fiscal Aspects of Evolving Federations," International Tax and Public Finance, Springer, vol. 3(2), pages 121-135, May.
- Era Dabla-Norris, 2005. "Issues in Intergovernmental Fiscal Relations in China," IMF Working Papers 05/30, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.