Title Analysis and How to Prevent Local Fiscal Risk
Abstract
After having experienced several financial turmoils, especial the financial storm in Southeast Asia, the entire society has developed a deep awareness on its seriousness and has reached a consensus to guard against it. However, because of various reasons, comparing to the financial risk, there is still insufficient attention to seriousness of local fiscal risk. How to analyze and define the local fiscal risk reasonably, how to carry on the correct statistics on each concrete factor causing local fiscal risk, how to guard and reconcile the local fiscal risk, these questions should cause the entire social and the whole government's attention. Firstly, on the basis of pioneer's research results, this article has made bold innovations which include defining the local fiscal risk as the deficit risk and the debt risk, dividing the local fiscal risk into the current capacity risk and the storage quantity risk. Using this method, we can conveniently and intuitively calculate the local fiscal risk Obtaining the deficit and debt of local government previous years, we can calculate our country's local fiscal risk. Secondly, there are many reasons to cause the local fiscal risk. Among these reasons, the unclear powers and obligation between the central committee and local government, the asymmetrical balance of fiscal revenue and expenditure, the unnormal transfer payment and the defects of official inspiration are main reasons. Finally, for the above reasons, feasible solutions are summarized: to give the clear division of obligation about the whole governments, to consummate the normal transfer payment, to cancel local government’s power of secured loan to state-owned enterprise, to entrust the Auditing department bigger supervisory authority. At the same time, some simple elaborations are made, such as the objective and the path of the program.
Keywords Fiscal risk System of tax distribution Fiscal system
