Local Tax Effort in Shanghai, 1987-93 Decentralization vs. Local Fiscal Balance
S. Philip Hsu
tax effort ； decentralization ； local fiscal balance ； turnover taxes ； extrabudgetary revenue
Issues & Studies
|Volume or Term/Year and Month of Publication||
36卷6期（2000 / 11 / 01）
116 - 138
This article seeks to link two major research trends in recent literature on PRC central-local relations: the growing attention to local governments 'fiscal conditions, and the rising impact of local governmental behavior and strategies on the course of the nation's overall reform program. The goal is to explore the relative explanatory power of two competing effects-localfiscal balance ex ante and the momentum ofdecentralization throughout the nation—on local tax effort at a given point of time. Chronological comparison is made of tax-collecting behaviors of the municipal government of Shanghai (a province-level entity) in the area of turnover taxation on state-owned enterprises (SOEs) during 1987-88, 1990, and 1992-93. The major discovery is that decentralization overrides local fiscal balance in dictating local behavior an insight which supports the theoretical vitality of factors derived uniquely from the PRC's political landscape and reveals the weaker explanatory power of general theories in political science.