The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China
In China, most of the service delivery responsibilities are assigned to the subnational governments. Yet for reasons of efficiency in tax collection and administration, the central government collects revenues far in excess of its expenditure needs. In 2003 the central government collected 70 percen...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2006/12/7282986/reform-intergovernmental-transfer-system-china http://hdl.handle.net/10986/9259 |
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okr-10986-9259 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AD HOC GRANTS ADMINISTRATIVE SUPERVISION ALLOCATION CRITERIA BLOCK GRANTS BUDGET COMMITTEE BUDGET EXECUTION BUDGETARY EXPENDITURE CAPITA TRANSFERS CAPITAL GRANTS CENTRAL ADMINISTRATION CENTRAL BUDGET CENTRAL GOVERNMENT CENTRAL TAX CENTRAL TRANSFERS CITIES COUNTY GOVERNMENTS DECENTRALIZATION DEFICITS EQUALIZATION STANDARD EQUALIZATION SYSTEM EQUALIZATION TRANSFERS EQUITY OBJECTIVES EXCISE TAXES EXPENDITURE NEEDS EXPENDITURE POLICIES FISCAL CAPACITY FISCAL CAPACITY EQUALIZATION FISCAL CAPACITY EQUALIZATION PROGRAM FISCAL DEFICIENCY FISCAL DISPARITIES FISCAL EFFORT FISCAL EQUALIZATION FISCAL EQUALIZATION PROGRAM FISCAL GAP FISCAL GAPS FISCAL HEALTH FISCAL MANAGEMENT FISCAL NEED FISCAL RESOURCES FISCAL RESPONSIBILITIES FISCAL RESPONSIBILITY FISCAL SURPLUS FISCAL SYSTEM FISCAL TRANSFERS GRANT PROGRAMS GROSS DOMESTIC PRODUCT INCOME TAX INCOME TAX REVENUES INCOME TAXES INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL GRANT INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFER SYSTEM INTERGOVERNMENTAL TRANSFERS LEVEL OF GOVERNMENT LOCAL AUTONOMY LOCAL EXPENDITURE LOCAL GOVERNMENT LOCAL GOVERNMENTS LOCAL OWNERSHIP LOCAL REVENUE LOCAL REVENUE BASE LOCAL SERVICE PROVISION LOCAL TAX LOCAL TRANSFERS METROPOLITAN AREAS MINISTRY OF FINANCE NATIONAL BUDGETS NATIONAL MINIMUM STANDARDS NATIONAL OBJECTIVES NATIONAL TAX PERSONAL INCOME PERSONAL INCOME TAX PERSONAL INCOME TAXES PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PROVINCES PROVINCIAL AUTONOMY PROVINCIAL EXPENDITURE PROVINCIAL EXPENDITURES PROVINCIAL FLEXIBILITY PROVINCIAL GOVERNMENT PROVINCIAL GOVERNMENTS PROVINCIAL REVENUES PUBLIC PUBLIC EMPLOYEES PUBLIC FINANCE PUBLIC SECTOR PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR GOVERNANCE PUBLIC SERVICE PUBLIC SERVICE PROVISION PUBLIC SERVICES REGIONAL DISPARITIES REVENUE ADEQUACY REVENUE SHARING REVENUE SHARING PROGRAMS SERVICE DELIVERY SOCIAL ASSISTANCE SOURCE OF REVENUES STABILIZATION SUB-NATIONAL GOVERNMENTS SUBNATIONAL GOVERNMENTS TAX ADMINISTRATION TAX ASSIGNMENT TAX BASE TAX BASES TAX COLLECTION TAX COMPETITION TAX EFFORT TAX RATE TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SHARING TAX SYSTEM TAXABLE CAPACITY TAXATION |
| spellingShingle |
AD HOC GRANTS ADMINISTRATIVE SUPERVISION ALLOCATION CRITERIA BLOCK GRANTS BUDGET COMMITTEE BUDGET EXECUTION BUDGETARY EXPENDITURE CAPITA TRANSFERS CAPITAL GRANTS CENTRAL ADMINISTRATION CENTRAL BUDGET CENTRAL GOVERNMENT CENTRAL TAX CENTRAL TRANSFERS CITIES COUNTY GOVERNMENTS DECENTRALIZATION DEFICITS EQUALIZATION STANDARD EQUALIZATION SYSTEM EQUALIZATION TRANSFERS EQUITY OBJECTIVES EXCISE TAXES EXPENDITURE NEEDS EXPENDITURE POLICIES FISCAL CAPACITY FISCAL CAPACITY EQUALIZATION FISCAL CAPACITY EQUALIZATION PROGRAM FISCAL DEFICIENCY FISCAL DISPARITIES FISCAL EFFORT FISCAL EQUALIZATION FISCAL EQUALIZATION PROGRAM FISCAL GAP FISCAL GAPS FISCAL HEALTH FISCAL MANAGEMENT FISCAL NEED FISCAL RESOURCES FISCAL RESPONSIBILITIES FISCAL RESPONSIBILITY FISCAL SURPLUS FISCAL SYSTEM FISCAL TRANSFERS GRANT PROGRAMS GROSS DOMESTIC PRODUCT INCOME TAX INCOME TAX REVENUES INCOME TAXES INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL GRANT INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFER SYSTEM INTERGOVERNMENTAL TRANSFERS LEVEL OF GOVERNMENT LOCAL AUTONOMY LOCAL EXPENDITURE LOCAL GOVERNMENT LOCAL GOVERNMENTS LOCAL OWNERSHIP LOCAL REVENUE LOCAL REVENUE BASE LOCAL SERVICE PROVISION LOCAL TAX LOCAL TRANSFERS METROPOLITAN AREAS MINISTRY OF FINANCE NATIONAL BUDGETS NATIONAL MINIMUM STANDARDS NATIONAL OBJECTIVES NATIONAL TAX PERSONAL INCOME PERSONAL INCOME TAX PERSONAL INCOME TAXES PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PROVINCES PROVINCIAL AUTONOMY PROVINCIAL EXPENDITURE PROVINCIAL EXPENDITURES PROVINCIAL FLEXIBILITY PROVINCIAL GOVERNMENT PROVINCIAL GOVERNMENTS PROVINCIAL REVENUES PUBLIC PUBLIC EMPLOYEES PUBLIC FINANCE PUBLIC SECTOR PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR GOVERNANCE PUBLIC SERVICE PUBLIC SERVICE PROVISION PUBLIC SERVICES REGIONAL DISPARITIES REVENUE ADEQUACY REVENUE SHARING REVENUE SHARING PROGRAMS SERVICE DELIVERY SOCIAL ASSISTANCE SOURCE OF REVENUES STABILIZATION SUB-NATIONAL GOVERNMENTS SUBNATIONAL GOVERNMENTS TAX ADMINISTRATION TAX ASSIGNMENT TAX BASE TAX BASES TAX COLLECTION TAX COMPETITION TAX EFFORT TAX RATE TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SHARING TAX SYSTEM TAXABLE CAPACITY TAXATION Shah, Anwar Shen, Chunli The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China |
| geographic_facet |
East Asia and Pacific East Asia China |
| relation |
Policy Research Working Paper; No. 4100 |
| description |
In China, most of the service delivery responsibilities are assigned to the subnational governments. Yet for reasons of efficiency in tax collection and administration, the central government collects revenues far in excess of its expenditure needs. In 2003 the central government collected 70 percent of consolidated revenues but accounted for only 30 percent of consolidated expenditures. The initial fiscal surplus of the central government enables it to use its spending power to provide financing to subnational jurisdictions for the achievement of national objectives and to influence local priorities. This paper examines the incentives associated with the design of such transfers and their implications for the efficiency and equity of public service provision and accountable local governance in China. The paper argues that the existing design of such transfers is not consistent with efficiency and equity considerations. It further undermines local autonomy without enhancing local accountability while creating incentives for imprudent fiscal management. Its main limitations include a complex and opaque system, a piecemeal approach to gap filling, lack of consistency of design with objectives, focus on input controls without regard for output accountability, incentives to support an antiquated management paradigm, a one-size-fits-all approach to local financing, and lack of transparency and regulatory framework for the intergovernmental transfer system. The paper makes specific suggestions on a reform of this system to overcome these limitations and on better use of fiscal transfers to create responsive, responsible, equitable, and accountable local governance in China. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Shah, Anwar Shen, Chunli |
| author_facet |
Shah, Anwar Shen, Chunli |
| author_sort |
Shah, Anwar |
| title |
The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China |
| title_short |
The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China |
| title_full |
The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China |
| title_fullStr |
The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China |
| title_full_unstemmed |
The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China |
| title_sort |
reform of the intergovernmental transfer system to achieve a harmonious society and a level playing field for regional development in china |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2006/12/7282986/reform-intergovernmental-transfer-system-china http://hdl.handle.net/10986/9259 |
| _version_ |
1764406784346292224 |
| spelling |
okr-10986-92592021-04-23T14:02:42Z The Reform of the Intergovernmental Transfer System to Achieve a Harmonious Society and a Level Playing Field for Regional Development in China Shah, Anwar Shen, Chunli AD HOC GRANTS ADMINISTRATIVE SUPERVISION ALLOCATION CRITERIA BLOCK GRANTS BUDGET COMMITTEE BUDGET EXECUTION BUDGETARY EXPENDITURE CAPITA TRANSFERS CAPITAL GRANTS CENTRAL ADMINISTRATION CENTRAL BUDGET CENTRAL GOVERNMENT CENTRAL TAX CENTRAL TRANSFERS CITIES COUNTY GOVERNMENTS DECENTRALIZATION DEFICITS EQUALIZATION STANDARD EQUALIZATION SYSTEM EQUALIZATION TRANSFERS EQUITY OBJECTIVES EXCISE TAXES EXPENDITURE NEEDS EXPENDITURE POLICIES FISCAL CAPACITY FISCAL CAPACITY EQUALIZATION FISCAL CAPACITY EQUALIZATION PROGRAM FISCAL DEFICIENCY FISCAL DISPARITIES FISCAL EFFORT FISCAL EQUALIZATION FISCAL EQUALIZATION PROGRAM FISCAL GAP FISCAL GAPS FISCAL HEALTH FISCAL MANAGEMENT FISCAL NEED FISCAL RESOURCES FISCAL RESPONSIBILITIES FISCAL RESPONSIBILITY FISCAL SURPLUS FISCAL SYSTEM FISCAL TRANSFERS GRANT PROGRAMS GROSS DOMESTIC PRODUCT INCOME TAX INCOME TAX REVENUES INCOME TAXES INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL GRANT INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFER SYSTEM INTERGOVERNMENTAL TRANSFERS LEVEL OF GOVERNMENT LOCAL AUTONOMY LOCAL EXPENDITURE LOCAL GOVERNMENT LOCAL GOVERNMENTS LOCAL OWNERSHIP LOCAL REVENUE LOCAL REVENUE BASE LOCAL SERVICE PROVISION LOCAL TAX LOCAL TRANSFERS METROPOLITAN AREAS MINISTRY OF FINANCE NATIONAL BUDGETS NATIONAL MINIMUM STANDARDS NATIONAL OBJECTIVES NATIONAL TAX PERSONAL INCOME PERSONAL INCOME TAX PERSONAL INCOME TAXES PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PROVINCES PROVINCIAL AUTONOMY PROVINCIAL EXPENDITURE PROVINCIAL EXPENDITURES PROVINCIAL FLEXIBILITY PROVINCIAL GOVERNMENT PROVINCIAL GOVERNMENTS PROVINCIAL REVENUES PUBLIC PUBLIC EMPLOYEES PUBLIC FINANCE PUBLIC SECTOR PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR GOVERNANCE PUBLIC SERVICE PUBLIC SERVICE PROVISION PUBLIC SERVICES REGIONAL DISPARITIES REVENUE ADEQUACY REVENUE SHARING REVENUE SHARING PROGRAMS SERVICE DELIVERY SOCIAL ASSISTANCE SOURCE OF REVENUES STABILIZATION SUB-NATIONAL GOVERNMENTS SUBNATIONAL GOVERNMENTS TAX ADMINISTRATION TAX ASSIGNMENT TAX BASE TAX BASES TAX COLLECTION TAX COMPETITION TAX EFFORT TAX RATE TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SHARING TAX SYSTEM TAXABLE CAPACITY TAXATION In China, most of the service delivery responsibilities are assigned to the subnational governments. Yet for reasons of efficiency in tax collection and administration, the central government collects revenues far in excess of its expenditure needs. In 2003 the central government collected 70 percent of consolidated revenues but accounted for only 30 percent of consolidated expenditures. The initial fiscal surplus of the central government enables it to use its spending power to provide financing to subnational jurisdictions for the achievement of national objectives and to influence local priorities. This paper examines the incentives associated with the design of such transfers and their implications for the efficiency and equity of public service provision and accountable local governance in China. The paper argues that the existing design of such transfers is not consistent with efficiency and equity considerations. It further undermines local autonomy without enhancing local accountability while creating incentives for imprudent fiscal management. Its main limitations include a complex and opaque system, a piecemeal approach to gap filling, lack of consistency of design with objectives, focus on input controls without regard for output accountability, incentives to support an antiquated management paradigm, a one-size-fits-all approach to local financing, and lack of transparency and regulatory framework for the intergovernmental transfer system. The paper makes specific suggestions on a reform of this system to overcome these limitations and on better use of fiscal transfers to create responsive, responsible, equitable, and accountable local governance in China. 2012-06-26T16:14:03Z 2012-06-26T16:14:03Z 2006-12 http://documents.worldbank.org/curated/en/2006/12/7282986/reform-intergovernmental-transfer-system-china http://hdl.handle.net/10986/9259 English en_US Policy Research Working Paper; No. 4100 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific East Asia China |