Fiscal Decentralization and Peasants' Financial Burden in China
This paper sheds light on the heavy financial burden on peasants in China's fiscal decentralization system. Using a political economy framework, this paper explores the tax-farming nature of China's fiscally decentralized system and examines why the system incurs a particularly heavy financial burden on peasants. Specifically, it points out that a political hierarchy financed by a tax-farming system in China, fails to contain the exploitative behavior of local officials, which results in the expenditure devolution and revenue centralization within the hierarchy. Ultimately, peasants bear the brunt of the tax burden. As the financial pressure of excessive levies and fees reaches a perilous point, peasants are resorting to violent protests. Unless a fiscally decentralized system with horizontal accountability mechanisms evolves, the country's ability to sustain a centralized polity may become increasingly undermined. A case study of township finance is used to exemplify the exploitative nature of China's fiscal decentralization system.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francesca Fornasari & Steven B. Webb & Heng-fu Zou, 1999.
"The Macroeconomic Impact of Decentralized Spending and Deficits: International Evidence,"
CEMA Working Papers
28, China Economics and Management Academy, Central University of Finance and Economics, revised Oct 2000.
- Francesca Fornasari & Steven B. Webb & Heng-fu Zou, 2000. "The Macroeconomic Impact of Decentralized Spending and Deficits: International Evidence," Annals of Economics and Finance, Society for AEF, vol. 1(2), pages 403-433, November.
- Peter Stella, 1993. "Tax Farming: A Radical Solution for Developing Country Tax Problems?," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 217-225, March.
- Bahl, Roy W. & Wallich, Christine, 1992. "Intergovernmental fiscal relations in China," Policy Research Working Paper Series 863, The World Bank.
- Yingyi Qian & Barry R. Weingast, 1997.
"Federalism as a Commitment to Reserving Market Incentives,"
Journal of Economic Perspectives,
American Economic Association, vol. 11(4), pages 83-92, Fall.
- Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Preserving Market Incentives," Working Papers 97042, Stanford University, Department of Economics.
- Yin Heng, 2008. "Fiscal Disparities and the Equalization Effects of Fiscal Transfers at the County Level in China," Annals of Economics and Finance, Society for AEF, vol. 9(1), pages 115-149, May.
- Jan K. Brueckner, 2000.
"Fiscal Decentralization in Developing Countries: The Effects of Local Corruption and Tax Evasion,"
Annals of Economics and Finance,
Society for AEF, vol. 1(1), pages 1-18, May.
- Jan K. Brueckner, 1999. "Fiscal Decentralization in Developing Countries: The Effects of Local Corruption and Tax Evasion," CEMA Working Papers 1, China Economics and Management Academy, Central University of Finance and Economics, revised Apr 2000.
- Wildavsky, Aaron, 1985. "A cultural theory of expenditure growth and (Un)balanced budgets," Journal of Public Economics, Elsevier, vol. 28(3), pages 349-357, December.
- Brennan,Geoffrey & Buchanan,James M., 2006.
"The Power to Tax,"
Cambridge University Press, number 9780521027922, June.
When requesting a correction, please mention this item's handle: RePEc:cuf:journl:y:2012:v:13:i:1:jinshenzou. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao)
If references are entirely missing, you can add them using this form.