I. Summary
The New Urbanization system is an important tactical decision in developing socialism in Chinese characteristics. This has an insightful implication for the extensive plans towards the development of a prosperous society, as it helps support the acceleration of socialist modernization, as well as other causes. Accordingly, the growth among new urbanization systems demands the provision for any relevant and required mechanism in the system. Based on the released documents from the State Council, the promotion of new development schemes in urbanization system is a vital element if only to achieve new urbanization in 2015.
According to the premise of a new urbanization system expressed in the National New Urbanization Plan of 2014-2020, (Fu and Yan, n.p) it was pointed that the security measures were aimed at promoting the innovative urbanization system in China, specifically in the western part of the state. It is to be noted that there was an ongoing difficulty attributed to urbanization according to the public finance and taxation perspectives. The restructuring of the tax system about twenty years ago resulted in the rapid increased in fiscal income, which in 2013 was reported to have reached about 13 Trillion yuan (Fun and Yan, n.p). The previous fiscal taxation system resulted to several complications in the current urbanization of China, and fortunately, a closer examination of these problems are expected to lead to satisfactory solutions.
II. Concept
New Urbanization strategies are vital in building a better society as it accelerates the growth of socialist transformation. As pointed out in the paper, urbanization is associated with fiscal revenue, expenses and fiscal transfer payments. An examination showed that urbanization has a positive impact in a) the amount of fiscal payment, b) other payment-related indices, and c) scale and structure of the tax that directly influences the different sources of fiscal income (Fu and Yan, n.p). This result of an examination has an important implication in China, especially among its local governments that do not usually generate sufficient income to cover its expenses.
Moreover, there was also the problem about the unreasonableness of the revenue structure in China. This is especially so in the revenue framework among local governments; for instance, the problem arises when tax, which should be the main source of government revenue is not sufficient and the non-tax income accounts for a greater percentage in the income of local government. According to analyst, a higher dependency of a local government on non-tax income is an indication of an insufficiently reasonable income structure. In addition to that, China’s financial structure is also biased in terms of the transfer payment system. One of the observed biased is the apparent favorable treatment to more affluent regions, because they receive a higher number of transfer payments, compared to the regions that do not perform as well. The overall implication is the possible widening of the gap between the rich and the poor, as well as the degree of urbanization among different regions. Another weakness of the current fiscal system is that it neglects to consider the change in the population, such as the increase due to immigration.
III. Analysis
The difficulty brought about by urbanization based on the viewpoint of public finance and taxation can be resolved through the division of fiscal responsibility in each local government level. It is to be noted that each level of the local government has a different responsibility, and it was a customary practive before the 1994 reform that the duty towards urbanization was under the local government. With the progress of urbanization, there will be a need for the different levels make the necessary adjustment. The analysis and eventual adjustment when needed is vital to attain the goal of urbanization.
There is also a need to enhance the structure of general transfer as a means to have an easier processing of general transfer from the national to the local government. The upgrading of the general transfer payment scheme will have other positive impact such as increasing the calculation of general transfers, as well as narrowing the wide gap that separated the wealthy and the underprivileged. Further, in line with the imposition of taxes, there is a need to innovate in terms of seeking main taxes such as the acceleration of real estate as well as social security taxes.
IV. Conclusion
This commentary is important for financial managers because it specifically addresses the need to adopt innovative measures to achieve the urbanization system in West China. The public finance and taxation perspective, there is a need to further examine the structure of the government’s fiscal income. There are propositions about the solutions towards these problems such as the enhancement of the methods used in fiscal transfer and the local tax structure. There was also a need to find other options to generate taxes such as social security taxes. There are many helpful ways when taxes can help in supporting several projects for the betterment of the society.
Works Cited
Fu, Zhiyu and Yan, Wenhong. Promoting the Innovation of Urbanization System in Western China from the Perspective of Public Finance and Taxation. China Finance and Economic Review 4 (4)
