The ideas about the model and structure of China’s local tax system

Abstract

Since the reform of tax sharing system in 1994, China has preliminarily set up a local taxation system which plays an important role in forming a public financial framework that meets the requirements of market economy. However, because of the unreasonable elements in current local tax sharing system such as local taxation lacks efficient major taxes categories and problems between state taxation and local taxation, which might bring instability to the financial fields between central and local government. Under the principal of accelerating government functions transformation and modern country governance system construction, the mode that “central government has the rights to legislate taxation laws and to cease collecting tax while local government are entitled to the rights to adjust and explain taxation laws” should be conducted in the area of tax power distribution; In the modes of taxation income distribution, we should focus on sharing tax in short term and gradually develop main tax types in local areas; In the long run, we should place importance on mature local main tax types with the feature of tax sharing so as to form the pattern that tax sharing distribution and local tax revenue have an equally important role.