The Relationship between Land Finance and the Tax-Sharing System Reform: An Empirical Study

Abstract

With the reform of the fiscal and taxation system, the local government adjusts sources of revenue accordingly. In 1994, Chinese government began to the tax-sharing system reform. The local government financial powers and responsibilities did not match. At the same time, the proportion of the land transfer fees in fiscal revenue kept rising after 1994. This article analyzes the relationship between land finance and the tax-sharing reform, and sets up a corresponding model. Then by using the method of regression analysis, it is concluded that they were both positive proportional relationship. Finally, we make suggestions about strengthening the fiscal and taxation system reform and doing a good budget planning.