County governments deserve more input for public services

The adjustment of financial resources among governments of various levels will, by its nature, lay the foundation for a transformation of government's role. Government should serve as a public service provider, but not a dominator of the market, says an editorial in the 21st Century Business Herald. Excerpts:

A new report from the State auditing administration suggests that only 22.77 percent of county-level governments' expenditures is decided by themselves, and the other 77.23 percent is spent on agriculture, education, scientific research and other fields determined by the State.

Many county governments are trying their best to increase their non-tax revenue to pay for the compulsory needs. Non-tax income accounts for 60.45 percent of the county government's fiscal revenue on average.

The potential debt crisis of county governments in China has been the basis for wide concerns about the stability of Chinese grassroots governments' finances. Local governments are eager to increase their non-tax revenues. But this eagerness is translated into heavy burdens on local enterprises and residents, aggravating the financial burdens on society and the economy.

We should also see that county and city governments provide about 80 percent of Chinese people's public services. But these governments' meager financial revenue makes it very difficult for them to make ends meet if they do not seek more income from land transfers.

The county and city governments get 17 percent from local added-value tax, and 25 percent of local income tax.

The central government should reset the proportion of tax shares among governments of different levels to ensure that grassroots governments have enough money to cover their responsibilities as main public service providers. Otherwise, the grassroots governments will turn to local enterprises and residents to fill their financial gap.

The central government pays a lot of money for some large-scale infrastructure construction projects. Now it is time for the central authority to reflect on this kind of investment, which takes considerable financial resources away from areas of public service.

The Chinese government should release its control on such projects and invite more companies of various ownerships, especially China's private companies, to participate in large-scale projects as investors and constructors. More money should be saved for county and city governments if they are to continue to serve as the main public service providers.