Debate 3 Essay

Submitted By Chrisvicky
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Pages: 3
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Time: Monday, 27 July •
Topic: On the problem in fiscal system
• format: group presentation
• 10 min presentation
• identify a specific problem in China’s fiscal system
• propose a policy recommendation to amend the problem
• explain the economic rationale behind your recommendation
• 5 min comment on the group presentation before your group (the first group will comment the presentation of the last group in the end)

problem in China’s fiscal system the central government revenue increase every year, but the expenditure which represent the share of GDP decrease. from 1994 of the Fiscal Reform, the central government collected most taxes, then share with local. some tax, which should belong to the local government, now belongs to the central government. but the expenditure for the local government still increase. the local government always has financial deficit. we can see the financial revenue and expenditure between local and central government. here is the data of china’s financial expenditure and revenue in 2013. the central government revenue is about ６０１７４

hundred million yuan. the local goverenment revenue is about ６８９６９hundred million yuan. the central government expenditure is about ２０４７２hundred million yuan，the local government expenditure is about１１９２７２ hundred yuan. although the central government give the local government some subsidy. the education and health expenditure are still represented by the local government. the education expenditure is about ２１８７７hundred million yuan. the health expenditure is about
８２０９hundred million yuan. we can find that the education and the health expenditure occurred about ⅕ of the total local government expenditure. this would be quite a burden for the local government. the reason why these part of expenditure belongs to the local government is that, it’s easy for the local government to know the local situation for how much should be used on education and health. (each province has different situation, it’s hard for the central government to manage). but the problem is that they didn’t consider that after the 1994 of the fiscal reform. the ratio of the local government revenue decrease compared with the central government. the ratio of the expenditure between the local and central government didn’t change as much as the ratio of the revenue.

policy

decrease the local government expenditure, and share
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