Local Government Debt Governance from the Perspective of Tax Sharing Reform:Theoretical Analysis and Path Outlook
This paper examines the historical evolution,institutional characteristics,and academic debates surrounding the tax-sharing system reform,aiming to clarify the reform's institutional effects on local government debt governance and to outline potential pathways for further reform.Amidst the pursuit of high-quality development,it is imperative to advance local government debt governance.It not only concerns the strategic outlook of preventing and resolving major economic and financial risks,it also underscores its theoretical value.There are practical significances in nurturing financial resources and fostering new development impetus.Furthermore,it plays a significant role in constructing a high-level socialist market economy system.It posits that the tax-sharing system reform effectively leverages the"dual incentives"of central and local governments,thereby laying the groundwork for a decentralized governance framework aligned with the socialist market economy.From an institutional economics perspective,the reform of the tax-sharing system primarily influences the policy direction of local government debt governance through fiscal and political incentives.This paper aims to address three key academic debates.Firstly,it argues that the financing patterns of local government debt prior to the tax-sharing system reform do not diminish the institutional impacts brought about by the reform.Secondly,it suggests that vertical transfer payments not only fail to mitigate the fiscal incentives of the tax-sharing system reform but also exacerbate the"common pool"effect on local government debt governance.Thirdly,following the implementation of the tax-sharing system reform,there has been a notable shift in the motivational dynamics driving local officials towards debt financing,transitioning from"a profit-driven orientation"to"one predominantly focused on risk mitigation and avoidance strategies".Furthermore,this paper analyzes the implications of the tax-sharing system reform,finding that it effectively harnesses the"dual incentives"of central and local governments,thereby encouraging local governments to issue debt for the construction of municipal infrastructure.By integrating administrative mobilization capabilities with market enhancement abilities,the reform has spurred considerable infrastructure development at the local level.However,the focus on"respond to superiors"rather than"respond to subordinates"in the responsibility constraint mechanism has also led to the continuous generation,expansion,and concealed accumulation of local government debt risks.This paper provides strategic reform directions for fiscal power division,authority allocation,administrative supervision,and market constraints to promote the tax-sharing reform and local government debt governance under the context of high-quality development,with the aim of building a high-level socialist market economy system.
tax-sharing reformlocal government debt governancefiscal incentivepolitical incentive
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