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Baoyun Qiao and Anwar Shah
diversities in the structure of transfers across provinces because of regional disparities in fiscal resources. Intergovernmental transfer programs can be grouped into general-purpose transfers and special-purpose transfers, as shown in table 4.9.
General-Purpose Transfers Besides tax sharing, general-purpose transfers include tax rebates and equalization transfer. Tax rebates have two parts. First, 30 percent of the increased VAT and consumption tax over the preceding year in a province is returned to that province as a tax rebate.7 Second, the difference between the base revenue and the provincial shared part of income taxes is reimbursed to the provincial government by the central government.
T A B L E 4 . 9 Intergovernmental Transfers, 2003 Central-provincial
Transfers
Amount (US$ billion)
Provincialprefecture
Provincial/ prefecture-county
Percentage Amount Percentage Amount Percentage of total (US$ of total (US$ of total transfers billion) transfers billion) transfers
General-purpose grants Tax sharing 43.1 Tax rebate 41.5 Equalization 4.6 Subtotal 89.2
30.6 29.5 3.3 63.4
28 20.2 4.8 53.0
28.8 20.8 4.9 54.5
13.5 15.3 3.7 32.5
20.6 23.3 5.6 49.5
Specific-purpose grants Higher compensation for public employees Rural tax reform Ethnic minority regions Prior-1994 subsidies Ad hoc transfers Others Subtotal
10.9 3.7 0.7 1.5 29.4 5.3 51.5
7.7 2.6 0.5 1.1 20.9 3.8 36.6
9.6 4.0 0.2 2.2 18.1 10.2 44.3
9.9 4.1 0.2 2.3 18.6 10.4 45.5
8.3 4.1 0.2 2.0 11.9 6.6 33.1
12.7 6.3 0.3 3.0 18.1 10.1 50.5
140.7
100
97.3
100
65.6
100
Total Percentage of local expenditure
Source: Data from Ministry of Finance of China.
67
57
66
