Local financial change: how to divide taxes and fees in governments at all levels

For local governments, the failure to match the power and the right to affairs is still a difficult problem. And unblocking the fiscal system can make the central government's strategy truly reach the end of the capillaries and benefit people's livelihood, but this is a real "hard bone".

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After nearly 20 years, the State Council once again issued a document to promote the reform of the fiscal system below, which has aroused widespread concern in society. The academic community even used the "big change" to describe the reform.

The reform of the "money bag" is often the "leader" of other economic field reforms. The folk has the saying that "where the money flows is flowing, and the opportunity is the opportunity". my country has a fifth -level government and unblocking the fiscal system can the central government's strategy truly reach the end of the capillaries and benefit people's livelihood, but this is a real "hard bone".

On June 13, the General Office of the State Council issued the "Guiding Opinions on Further Promoting the Reform of the Fiscal Systems below the Provincial" (Guoqi Fa [2022] No. 20). Matching the rights of the matter, the distribution of fiscal revenue below the province, the improvement of the transfer of transfers, and the standardized financial management below the provincial fiscal management. In layman's terms, which government does it, who comes out of money, and how to get out.

Define the rights and expenditure responsibilities of governments at all levels below the province

For local governments, the failure to match the power and the right to affairs is still a difficult problem.

Professor Fan Ziying of the School of Public Economics and Management of Shanghai University of Finance and Economics has done special research on this. He said that since 2012, my country has proposed the construction of a modern fiscal system. Everyone is recognized that the core of this round of fiscal and taxation system reform is the reform of central and local rights and expenditure responsibilities. Over the past few years, reforms have been continuously advanced in this regard, and have gradually completed the division of centralized and power in the fields of education, transportation, technology, ecology, culture, etc., and the reform of the financial system in the central and local and local governments has also been basically completed.

However, when these reform measures were implemented to the grassroots, they conflicted with the existing fiscal system below the provincial provincial.

The relevant person in charge of the Ministry of Finance said in interpretation of Circular 20 that as an extension of the relationship between the central and local fiscal relations, the reform of the fiscal system below the provincial province is relatively lagging. The aspects of equalization of basic public services are not adapted. It is mainly reflected in the incomplete and reasonable division of fiscal rights and expenditure responsibilities, income division and insufficient transfer payment below. Improvement, etc., need to be promoted by further deepening reforms.

Fan Ziying said that at present, the central government has no specific level of responsibility for local rights.

Therefore, the first thing to be solved by Circular 20 is to clearly define the liability and expenditure responsibility below the province. This includes two parts, one is the moderate transfer of financial power, such as moderate strengthening of education, scientific and technological research and development, basic pension insurance for enterprise employees, basic medical insurance for urban and rural residents, and food security. The second is to clarify the responsibility of fiscal expenditure at all levels below the province and reduce the burden on grass -roots fiscal. For example, basic public services such as social security, municipal transportation, urban and rural construction, rural roads, and public facilities are determined as municipal and county fiscal rights.

The prominent changes are reflected in "strengthening the provincial responsibility." The relevant person in charge of the Ministry of Finance stated that moderate strengthening provincial responsibilities can better play the role of provincial levels in overall planning, cross -regional coordination, comprehensive regulation, and unified management in the provincial level.

He said that higher -level finances should arrange for the transfer of common fiscal rights based on the responsibility of the expenditure, and avoid letting the subordinate fiscal passively bear the "bottom" responsibility. At the same time, in any form of assessment, evaluation, tasks, and supporting funds, the liability for lower -level expenditure will be increased or the liability for expenditure will be passed on to the lower level.

How to divide taxes and fees between governments at all levels

After clarifying the responsibility of affairs and expenditure, there must be the guarantee of "money bag". Local livelihood, education, medical care, and infrastructure construction mainly depend on local governments to complete, but the current financial income level of local governments is extremely uneven.

Zhao Fuchang, director of the Finance and National Governance Research Center of the Chinese Academy of Finance and State Governance, said that in the top -level design of the current tax system, the distribution of taxes involves only two subjects: "central" and "local", and no local tax or central local sharing local taxes are not involved. The retention part is further divided according to the local government four governments. In addition to VAT and income tax as sharing tax, the taxes left to the financial system below the province are mostly sporadic and small taxes.

my country implements a hierarchical fiscal system. The revenue of local finances at all levels mainly comes from taxes and fees, super -transfer payment, and funds for residuals in this level. Among them, taxes and fees depend on the local economic scale and sharing rules. Fan Ziying said that over the years, in order to mobilize the enthusiasm of the lower -level government to develop the economy, the higher -level government often linked the tax income of subordinates' finances to the local economy. From a positive point of view, this has produced a "strong inspiration" to develop the economy, but from a negative perspective, this also makes the local government tend to provide more development opportunities for local enterprises in order to obtain more fiscal and taxation income. As a result, local protectionism is formed in the product market and factor market, leading to the division of the product market and factor market.

Yang Zhiyong, deputy dean of the Institute of Finance and Economics of the Chinese Academy of Social Sciences, believes that the current disorderly fiscal competition in some places hinders the construction of a unified market in the country. For example, the local daring taxation and exemption, fiscal return, and "fiscal rewards" are essentially the performance of local random tax reduction and exemption, and it is an disorderly competition under the legal form. Therefore, Circular 20 must solve the problem of local governments' income and source of income. It stipulates that taxation income with strong taxation liquidity, uneven distribution of regions, and large fluctuations in annual income as provincial -level income or a higher proportion of sharing by the provincial level; Municipal and county -level income may be shared by the city and county levels.

The relevant person in charge of the Ministry of Finance explained that this arrangement was to allow governments at all levels to obtain stable income. The provincial financial resistance has strong impact on risks, and the functions of regulating and balanced regional financial resources. Therefore, the "insufficient stable" income in the previous description is to the provincial finance; Weak, "more stable" income left to the city and county.

It is worth noting that Circular 20 has made separate regulations on finance, electricity, oil, railway, highway and other industries, becoming a highlight of this reform. Due to the high taxes and fees of these industries and cross -regional operations, if the income is left to the company to register, it will exacerbate the gap between the income between regions, and it is also easy to impact the smooth operation of the county and district finance due to the fluctuation of income. Therefore, the document stipulates that the taxes and fees of the above -mentioned industries can be used as provincial -level income, and they can also be reasonably distributed among relevant cities and counties.

The reform also responded to the relevant policies of "building a national unified market". For example, gradually decrease until the cancellation of income according to the affiliation relationship, this approach can easily cause local governments to interfere with the operating behavior of market entities in order to protect the source of tax. Gradually clean up the subsidies or return policies linked to the market and linked to the tax income.

The relevant person in charge of the Ministry of Finance stated that this is a specific reform measure proposed from the perspective of the fiscal system, which is conducive to curbing local policies to introduce the market in improper intervention in the market, avoid the vicious competition of investment promotion policies, and destroy fair and orderly competition market environment.

Fan Ziying said that in fact, good government -level relationships should have two basic characteristics. The first is both principle and particularity. That is, the relationship between all fiscal levels should meet the common principles; on the basis of principle requirements, special circumstances in various places can be considered, and local conditions are allowed to be arranged flexibly according to local conditions. The second is to have certain elasticity. With the development of the times, the fiscal system between central and land needs to be adjusted, such as the subordinate of some taxes and the establishment of new taxes.

Be a real county -level "three guarantees"

The guarantee of "money bag" mainly depends on itself, and it is not enough. It can only be adjusted by the superior government. This is the so -called transfer payment. Some local revenue and expenditure gaps must be made up by the superior transfer payment.

Circular 20 further clarifies the positioning of various transfer payment functions. General transfer payment is used for the basic financial allocation of balanced areas, tilting towards the old revolutionary areas, ethnic areas, border areas, underwriting areas, and important functional areas; Performing the responsibility of the common financial rights expenditure that the government should bear ...

In the final analysis, this is for the "three guarantees" at the grassroots level (the basic livelihood, salary, and operation of operation). The "three guarantees" at the grassroots level are the "cockpit stones" for maintaining the stable development of economic and social development. Earlier, Wang Jianfan, director of the Budget Department of the Ministry of Finance, said that at present, due to the current factors such as the epidemic and tax refund and fee reduction, the county and district's financial operation pressure is relatively high. At the current critical moment Essence

So, how to keep the bottom line of the "Three Insurance"? The plan given by the Ministry of Finance is the "hierarchical responsibility system", that is, "county -level, municipal assistance, provincial -level bottom, central incentives".

Luo Zhiheng, chief economist of Yuekai Securities, said: "These 16 words actually determine the principle of 'three guarantees'. The basic responsibility lies in the county level, and at the same time, it has strengthened the responsibility of the provincial government's jurisdiction, that is, the" provincial level ". "According to the hierarchical responsibility system, all localities must coordinate the central transfer payment funds and own funds, increase the support for the transfer payment of" three guarantees "of the city and county, sink to the financial resources to the greatest extent, and resolutely take the" three guarantees "bottom line to support the economy to support the economy The broader market has stabilized.

On the 20th, a large orientation of the reform of the fiscal system below the provincial below provincial is to ensure that the grassroots guarantee is more powerful. It is required to do the "three guarantee" guarantee mechanisms of the county level and establish a long -term guarantee mechanism for the county -level financial resources.

The relevant person in charge of the Ministry of Finance stated that the county -level finance, as the foundation of the state, is a key part of the financial development of finances, and promoting the sustainable and healthy development of the economy and maintaining the stability of the overall social situation. To ensure the smooth operation of county -level finances, we must not only ensure that there are no problems in the current period, but also to plan for long -term planning. Through the reform of the fiscal system below the provincial system, the establishment and improvement of the long -term, solid, and long -term county -level financial support mechanism from the system and mechanism should be established. The foundation of the county -level finance is firm and consolidated, and the state's financial operation is placed on the basis of long -term stability and reliability.

In this way, in the arrangement and distribution of transfer payment funds, it is reasonable and saved. On the one hand, we will gradually promote the "Three Insurance" related transfer payments in combination with the actual situation. The province is included in the scope of the province's direct direct capital, and the risk prevention and emergency response of the "three guarantees"; on the other hand, implement the government's tight life requirements and adhere to diligence and thrift. The curtain has begun, and the government is determined to open the end of the capillaries and carry out the reform to the end. In recent years, my country has been emphasizing the improvement of the level of grass -roots governance, and promoting the reform of the financial system below the provincial government will reshape the governance model of the grass -roots government. The advantages of the socialist system are transformed into governance efficiency. "

Source: China Youth Daily

What problems do I need to solve this fiscal system reform

The 25th meeting of the Central Committee of the Central Committee for Comprehensive Deepening the Reform Commission reviewed and approved the "Guiding Opinions on Further Promoting the Reform of the Financial System below the provincial", and proposed a clear definition of the liability for fiscal rights and expenditures below the province. The first ring is also the basis and inherent requirements for improving local governance capabilities.

Power matching

The local governance system is an important part of the national governance system. The modernization of local governance is an important part of the modernization of national governance. Popularly speaking, the right to doctrine usually refers to the government's "what should do" and the fiscal power is "what should finance should do." The liability for expenditure is based on the division of power. The obligation to pay when governments at all levels must perform their duties, that is, "who will pay for it." Only by defining the definition of fiscal rights and expenditure responsibilities can we achieve the matching of power and responsibility, form a strong incentive and restraint mechanism, so that governments at all levels can do their own things within the scope of financial permission and improve their governance capabilities.

Clearly define the liability for fiscal rights and expenditure below the province, and it is also the urgent needs of giving full play to the enthusiasm of local governments at all levels and accelerating the construction of a unified national market. At present, some new contradictions and challenges are facing local economic and social development. In response to these contradictions and challenges, it is necessary to further stimulate the enthusiasm of the local area, and clearly define the financial power and expenditure responsibilities below the province, which can make them more clearly clear their responsibilities and promote the governance system to operate more effectively, thereby forming a combination of challenges and solving problems. From the perspective of building a national unified market, local governments are the main executives and responsible entities for building a unified market, and clearly define the fiscal rights and expenditure responsibilities below the province. Obstacles to eliminate system mechanisms in large markets.

Problem -oriented

In recent years, the localities have been based on reality and actively promoted the reform of the fiscal management system. Some explorations have been conducted in terms of power and expenditure responsibilities, and some achievements have been achieved, but they also face some outstanding problems.

The fiscal rights of governments at all levels below the province are unclear. Because my country does not have a clear government and regulations of government relations and division of rights at all levels, the division of fiscal power is lacking in the lack of legal basis, and the relationship between responsibility and power is not clear. Although this is conducive to maintaining the flexibility of the definition of fiscal rights and making a reasonable arrangement based on their actual conditions, it is also easy to lead to the randomness of the definition of fiscal rights. The introduction of a policy or measure often adopts the "superior post, subordinate execution" model. Subordinates are often passively accepted by the rights arranged by superiors. Passive mighty power is directly transformed into expenditure demand, bringing great pressure on fiscal operations.

Power and expenditure responsibility are unreasonable. Due to the inconspicuous and randomness of governments at all levels below the province, the unity of expenditure responsibilities is not standardized and unified, and there are phenomena such as "one thing, one discussion", "bargaining and repayment". Overlap and other issues. For example, in the fields of urban construction and environmental governance, the higher -level government takes the responsibility of expenditure in accordance with the proportion or appropriate subsidy, and the incomplete matching of expenditure responsibilities and the power of the matter will inevitably occur. Blind roads "" last mile "and other blind spots have reduced the efficiency of governance. Special expenses of higher -level governments sometimes adopt a sporadic dialing method, which are limited to some local projects and projects, and requires the subordinate government to give support. In order to fight for project funds, the subordinate government sometimes adopts false facilities, which affects the quality of the project and the efficiency of financial funds.

The power and expenditure responsibility and governance have not matched. The governments at all levels below the province are not the same for overall resources and development capabilities, information acquisition and processing capabilities. Therefore, the definition of power and expenditure responsibilities must be matched with the capabilities of governments at all levels. Although the grass -roots government has advantages in understanding the basic demands of the masses, community construction, and handling specific public affairs, in terms of processing cross -regional rights, promoting urban and rural development, promoting basic public services, and overall resources, etc. There is still a large gap in the government. At present, the problems of existing rights and expenditure responsibilities have caused incompetence of power and expenditure responsibilities and governance capabilities, which affects local governance efficiency.

The adjustment mechanism for the right to do with the responsibility of the matter and the expenditure is not sound. Some of the rights and expenditure responsibilities have their special historical background or reasons, but with the development and changes of the economy and society, it is no longer in line with the actual situation, and it is necessary to make dynamic adjustments according to the changes in the actual situation. Due to the incomplete adjustment mechanism of the rights and expenditure responsibilities, the situation that the rights and expenditure responsibilities and the laws of governance and reality are inconsistent, which affects the level of local governance. Coordinate

According to the central spirit, in response to the outstanding problems, define the principles of inspiring compatibility, compliance with the characteristics of governance, matching with local actuality and governance capabilities, etc. Administrative efficiency to stimulate the enthusiasm of local governments and improve local governance capabilities.

The first is to flexibly select the definition mode to match the power of the matter with the responsibility of expenditure. It is necessary to adhere to the principles of hierarchical management, that is, the provincial level, the province is responsible, the city and county, the city and county are responsible, and the city must adhere to the territorial management to exert the advantages and subjective initiative of the location, thereby improving the public services of the public services. Supply efficiency. According to the development status of cities and counties in the jurisdiction, comprehensive consideration of the inherent attributes and external nature, the scope of benefit, service efficiency, and the complexity of management information of various rights in the jurisdiction, pay more attention to the "short board" problem of governance, and open up public affairs "broken roads. ", Establish a mode of power and efficiency and expenditure liability definition model with clear power and responsibilities, compatibility, and efficient operation. The basic public services functions such as residents' lives, social security, urban and rural construction, and public facilities are appropriate to use the basic public service functions such as grass -roots governments to play information and management advantages, and strengthen the responsibility of the grass -roots governments to implement national policies and higher -level government policies.

The second is to appropriately increase some of the provincial government's fiscal rights, and give full play to the provincial -level coordination and coordination capabilities. The functions of the basic public services assumed by the higher -level governments have been shifted upward, and the duties of provincial governments in maintaining the stability of economic and social stability in the region, promoting the coordinated development of the economy, and the generalization of basic public services in the region should be appropriately appropriate. Receive some power supply of public services about the development of people. For example, in order to enhance the ability to prevent risks, it is necessary to give greater responsibilities and power to the provincial government, and to appropriately enhance their financial resources and expenditure responsibilities, and enhance their overall coordination, coordination and processing capabilities.

The third is to regulate the rights of common affairs, and reasonably determine the subject of the responsibility of expenditure. Generally speaking, the co -sharing model is divided into three types: provincial -level, city and county cooperation; city and county -based, provincial -level subsidies; provinces, cities and counties bear their duties. Consider the beneficiary scope of public services, distinguish the different natures of common rights, further subdivide the rights of common affairs, clarify the main relationship of the main body of common affairs, that is, to clarify which level is the main responsibility of the matter, reasonably determine the subject and the subject of the expenditure responsibility and the subject and the subject of the expenditure responsibility and the subject of the expenditure liability and reasonably Common mode. At the same time, it is necessary to strengthen the coordination of governance and public service supply in the jurisdiction, and enhance the unity and synergy of the definition of power and expenditure responsibility.

The fourth is to improve the adjustment and dispute processing mechanism of the liability for financial affairs and expenditures below the province. The definition of fiscal rights and expenditure liability needs to be operable, which must maintain proper stability, but also to grasp the timing and rhythm of dynamic adjustment due to the situation. With the changes in the development level and space structure, the demand for public services in the area will change in terms of quantity and quality. The adjustment mechanism of financial affairs and expenditure responsibilities below the province should be improved to echo the changes in the development level and demand. At the same time, establish and improve the dispute processing mechanism for the division of rights and expenditure responsibilities, strengthen communication and coordination, clarify power and responsibilities, and prevent the phenomenon of pushing skin in public service supply.

It should be emphasized that the definition of the power of affairs and expenditure is an important part of comprehensive deepening reform. It involves the optimization and adjustment of the entire government responsibilities. It is difficult for the financial department to complete it alone. (Author Fu Zhihua Vice President of the Chinese Academy of Finance Sciences)

Source: China Youth Daily

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