The Impact of Tax Sharing below the Provincial Level on Grassroots"Three Guarantees"Expenditure under the Constraint of Economic Growth Targets
Ensuring the"Three Guarantees"at the grassroots level is the basic financial requirement for grassroots governments to implement public management,provide basic public services,and implement various basic livelihood policies of the Party Central Committee and the State Council.However,the existing studies neglect the role of tax revenue sharing contract tools in ensuring grassroots"Three Guarantees"expenditures.What to be tested in this paper are threefold.Firstly,we investigate the impact of tax revenue sharing below the provincial level on grassroots"Three Guarantees"expenditures.Secondly,this paper explores the internal mechanism of the impact of tax revenue sharing below the provincial level on grassroots"Three Guarantees"expenditures.Thirdly,we examine whether the current fiscal policy can stimulate the protection of the"Three Guarantees"at the grassroots level by examining the two major measures to enhance grassroots financial resources-the transfer of joint fiscal powers and the direct mechanism of fiscal funds.The estimated results show that the increase in the proportion of tax sharing in cities and counties has not significantly incentivized grassroots"Three Guarantees"expenditures.Mechanism test shows that the increase in the tax sharing ratio of cities and counties has strengthened incentives for grassroots economic development and enabled them to set higher economic growth goals.The root cause of this phenomenon is that provincial economic growth goals are decomposed downwards through tax sharing.Further analysis shows that increasing the transfer payment of joint fiscal powers has not increased the expenditure of grassroots"Three Guarantees",and reducing the interception of fiscal transfer payment funds at the provincial and municipal levels can help improve the expenditure of grassroots"Three Guarantees".The main policy impliecations of this paper are threefold.Firstly,the central government should accurately calculate the scale of"Three Guarantees"expenditure and effectively strengthen the budget management of"Three Guarantees"expenditure.Secondly,the main job should focus on breaking the management model of economic growth targets and correcting the biased allocation of grassroots finance.Thirdly,the special use of funds for the transfer of common fiscal powers should be strengthened and a lifelong accountability mechanism for the use of fiscal funds should be established.Forthly,the implementation of a direct mechanism for fiscal funds should be accelerated and multiple supervision mechanisms at the provincial,municipal,and county levels should be established.
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