Luo Zhiheng and Xu Kaizhou: Under financial constraints, many places have seen an increase in non tax income. How can they help themselves? When local governments make every effort to alleviate financial conflicts, they should especially consider the positive and negative impacts.
2022The year is a year of frequent financial and economic challenges and increasing difficulties in China, facing triple pressures of demand contraction, supply shock, and weakening expectations. Since the beginning of this year, geopolitical and economic conflicts and the epidemic situation have significantly intensified. On the income side, finance faces constraints from the weakness of the real economy, while on the expenditure side, it bears two major expenditure responsibilities: epidemic prevention and control, and enterprise assistance and relief. At the same time, debt repayment and interest payment, as well as grassroots "three guarantees", are also rigid expenditures. This leads to a particularly significant responsibility for grassroots finance.1-7In January, the national local fiscal revenue decreased year-on-year7.6%, setting a new low for many years, and structurally experiencing new regional differentiation such as "rising in the west and falling in the east". Some regions have prominent financial contradictions, and the trend of open source and flow saving is imperative. When local governments make every effort to alleviate financial conflicts, they should especially consider the positive and negative impacts. On the one hand, measures such as increasing income, reducing expenses, and borrowing can expand fiscal space and avoid local fiscal liquidity crises. On the other hand, some measures, such as increasing fees and fines, and reducing public service expenditures, are likely to harm the interests of specific entities. Some may weaken the effect of tax and fee reductions, while others may damage the business environment and confidence, weakening economic growth potential. Debt measures can be used as a strategy to slow down the situation or increase the risk of grey rhinoceros and black swan incidents. In the medium to long term, solving local financial problems not only lies in optimizing the business environment and developing the economy, but also in improving the entire national governance system. As for the latter, local financial reform is an important component of the national financial system reform and modernization of the governance system. Local governments should implement reform measures at the national level, such as clarifying the relationship between the government and the market, determining and reasonably dividing the functions and powers of governments at all levels, and matching financial resources with expenditure responsibilities; Refine troops and streamline administration, and ensure that the scale of financial support personnel is in line with the negative population growth situation; Promote reforms in the tax system, state-owned assets, and social security. 1、 How to view the policy of increasing revenue and reducing expenditure in local finance? Tight fiscal revenue and expenditure, as well as an increase in the proportion of non tax revenue, are common characteristics of local finance in many regions. Since last year, the rebound of the epidemic and the economic downturn have led to a shortage of tax revenue. After conducting large-scale tax refunds this year, the growth gap between tax and non tax revenue has widened.1-7In the month of, the cumulative year-on-year growth of national tax revenue and non tax revenue was-13.8%and19.9%The growth rate of non tax revenue is significantly higher than that of tax revenue33.7Percentage points.1-7The proportion of monthly national tax revenue is only82.2%Below2019-2021Contemporaneous86%、85.9%、86.5%。 More than ten provinces have seen year-on-year growth in non tax revenue while tax revenue has decreased. The increase in the proportion of non-tax income is due to factors such as a decrease in tax revenue (including tax deductions and refunds), as well as factors such as the activation of idle state-owned assets through multiple channels in local areas, and an increase in income related to mineral resources and scenic area management rights. However, in some places, excessive profit seeking use of non-tax income to fill the income and expenditure gap has limited effectiveness and has resulted in various drawbacks. In terms of specific ways, some local governments mainly take five measures to relieve the pressure on fiscal revenue and expenditure, including asset disposal, expenditure tightening, surprise confiscation, delinquency and debt Financing. Except for disposing of state-owned property rights and reducing unnecessary expenses, other methods often have side effects. Therefore, methods with characteristics such as "fishing in a dry swamp" or "robbing the poor to aid the rich" should be avoided. （1） Dispose of state-owned property rights Most of the income is one-time and unstable The paid use income of state-owned resource assets is the largest non tax income in the general public budget, including the disposal of idle properties, transfer of mining rights, and scenic area management rights.2021According to the national financial final accounts in, the proportion of the paid use revenue of state-owned resource assets in the national financial revenue (referring to the general public budget) is5%In local finance, the proportion reaches8.3%Higher than nationwide. From research and information released by various regions, it can be seen that the main ways to revitalize state-owned assets (property rights) in various regions include disposing of idle properties such as resettlement houses, mining rights, and asset management rights such as scenic spots and parking spaces. The Department of Finance of Fujian Province pointed out that the income from the disposal of one-time assets such as resettlement houses and auxiliary buildings in Fuzhou, Zhangzhou, and other places has increased,1-7Monthly revenue from paid use of state-owned resources (assets) increased year-on-year63%。 Xinjiang revitalizes government resource assets by listing and selling idle oil and gas blocks in Bazhou, Kezhou, Aksu, and other areas,1-7Monthly revenue from paid use of state-owned resources (assets) increased year-on-year55.7%。 Some regions have taken a different approach, such as multiple cities and counties in the eastern, central, and western regions packaging and auctioning the management rights of parking spaces throughout the city, with the target amount often reaching the order of one billion yuan, and the time span is different10Years or more. In addition, a county-level city in the southwest will provide food materials distribution services for government agencies, enterprises, institutions and school canteens30Pricing of annual franchise rights1.8The auction was held for one billion yuan and was suspended after raising doubts. The paid use income of state-owned resources (assets) is similar to "land finance" and carries unsustainable risks. The government obtains funds from the transfer of state-owned land use rights, and then transfers this funds into the general public budget to make up for the difference in fiscal revenue and expenditure, which has been practiced for many years. In the context of the land market being cold and multiple cities experiencing auctions, local governments intend to use the paid use income of state-owned resource assets to make up for the income and expenditure gap. In fact, there is a certain similarity between the two. From the perspective of nature, all belong to the income obtained from the government's transfer or rental of government assets. From a scale perspective,2021The annual income from the transfer of state-owned land use rights in local areas minus corresponding expenses is8797One hundred million yuan, the paid use income of state-owned resources (assets) is9208RMB100mn From the perspective of deadline, the time span involved can all be reached10Years or more, with the highest residential land reaching70Year. The main risk of this income is poor sustainability. The government's one-time auction of property rights gains for the next few decades cannot become a means of obtaining regular and stable fiscal revenue. The excessive pursuit of profits by some local governments may also exacerbate the scarcity of resources, spawn a foam and lead to idle capital, which is not conducive to capital entering the physical field. (II) "Tightening" Finance: Actively Reducing General Expenditures and Ensuring Basic Livelihood Tight living has become a long-term policy that governments at all levels must adhere to. Recently, the State Council has repeatedly emphasized that governments at all levels should adhere to tight living standards and demand that funds be released to prioritize ensuring basic livelihood. In fact, the government's tight schedule is not a short-term passive response, but an active decision made by the Chinese government and a policy that must be adhered to in the long term. Party and government agencies, especially the central government, take the lead in practicing thrift, saving money to support people's livelihoods and market entities.2020Since the beginning of this year, the central government has arranged for two consecutive years of negative growth in expenditures, including2020Annual non urgent and non rigid expenditure reduction50%The above significantly reduces non rigid and non key project expenditures, as well as funding for "three guarantees", while the funds for "three guarantees" increase normally. However, some basic public services in some regions are currently facing difficulties. Since the middle of this year, there have been several incidents of bus shutdowns in cities such as Henan, Hunan, and Guangdong, due to severe losses by enterprises and inadequate government subsidies. A public transportation enterprise in a certain province in western China has notified that "employees can borrow money to pay their own wages". The guarantee of finance for urban public transportation is not only related to the payment of driver salaries, but also directly related to the convenience of transportation for middle and low-income people in the city. It is an important livelihood project. The suspension of public transportation reflects that some local governments still have shortcomings in ensuring people's livelihoods. In addition, this year, the salaries of civil servants in many regions have been lowered, the payment dates have been postponed, or non-standard subsidies have been cleaned up, which can play a positive role in diverting local financial resources. （3） Arbitrary fines and fees: the scale is uncertain, weakening the effect of tax reduction and fee reduction, and damaging the business environment The sudden imposition of fines and fees not only weakens the effectiveness of tax reduction and fee reduction, but also has a negative impact on the business environment. From a scale perspective, the total revenue from fines and administrative fees accounts for the general public budget revenue in China（2021Annual settlement3.9%Less than one twentieth of tax revenue, seemingly insignificant. However, fines and fees mainly benefit the same level of finance, while taxes are often shared proportionally by different levels of finance. Therefore, local governments have incentives to compensate for income and expenditure gaps through fines and fees. According to last year12In June, the Supervision Office of the Office of the State Council reported that a county-level city in North China had collected fees and imposed fines in a large area,11Monthly storage penalty income4729.57Ten thousand yuan, yes1—9Monthly confiscated income80The relevant responsible units and individuals were subsequently held accountable, dismissed or demoted. Some cases have also received attention, such as selling by small merchants in Yulin5Fine for exceeding the weight limit of celery6.6Ten thousand yuan, questioned by the State Council's inspection team as' excessive punishment is not equivalent '. Imposing fines and fees indiscriminately damages the ecology of enterprises. Firstly, the subjectivity of fines is strong and the scale is uncertain, which is an unstable income for finance and a shock to business expectations for enterprises. Secondly, indiscriminate fines and fees lack fairness, resulting in less fines for "related parties" and more fines and fees for general enterprises, seriously disrupting fair market competition. The central government has repeatedly demanded to resolutely prevent various types of charges from increasing the burden on enterprises, implement reform measures such as separating fines from payments, and standardize law enforcement procedures, effectively curbing the behavior of arbitrary charges and fines. However,2021Over the past year, there has been a significant increase in confiscated income. Data display,111In prefecture level cities that disclose data80A year-on-year increase in cities,15The year-on-year growth of fines and confiscations in cities exceeded100％。 this year8The "Opinions of the General Office of the State Council on Further Standardizing the Formulation and Management of Administrative Discretion Benchmarks" clearly states that "we must resolutely avoid arbitrary fines, strictly prohibit the use of fines for income generation, and strictly prohibit the use of fines as ranking or performance evaluation indicators". Recently, the central government has severely investigated and punished several local governments for their disorderly behavior towards market entities, focusing on reducing institutional transaction costs, which is conducive to stabilizing the current economic market. （4） Setting the accounting period: creating arrears, which is not conducive to improving the business environment The accounting period is a financial concept, but if the accounting period is too long, it will become a de facto arrears. Compared to prepayments and cash on delivery, payment by installment can alleviate financial pressure and save funds. Therefore, advantageous buyers often set accounting periods. Recently, the "accounting period" operation has restarted, and the issue of overdue payments may resurface. According to our research on local finance, the level of treasury guarantee in a certain region has increased from the previous level0.3Above (i.e. able to guarantee)0.3*30=9Days of expenses) reduced to0.15Around the same time, another region has postponed the fiscal salary payment date to alleviate the pressure of tight treasury funds. this year5In June, the Ministry of Finance requested that all regions prioritize the necessary expenses for epidemic prevention and control, such as vaccination, nucleic acid testing, and work subsidies for frontline medical personnel. However, there have been recent cases of arrears in the labor fees of nucleic acid testing personnel, and nucleic acid testing hospitals (institutions) are also facing the reality of advanced costs and delayed and insufficient settlement. （5） Debt Financing: open the "front door", manage the "back door" and guard against debt risks The issuance of bonds by local governments can fill the gap in revenue and expenditure.2020Since the beginning of the year, in order to actively hedge economic risks and implement the "Six Stabilities" and "Six Guarantees", China's fiscal deficit and local debt scale have been increased.2021At the end of the year, the national government debt leverage ratio ratio rose to47%, compared to2019The year has risen8.4Percentage points, both absolute and growth rates are lower than those of the United States（117.9%、18Percentage points), Japan（224.9%、21.9Major economies such as (percentage points) have retained significant fiscal space. Among them, local debt has grown rapidly,2022year6Balance of local government debt at the end of the month34.75Trillion yuan, compared to2019Year-end growth63.1%。 In the second half of the year, various regions will also revitalize5000More than 100 million yuan of local special bond balance limit, promoting the implementation of effective investment projects. The peak maturity of local bonds is approaching, and it is particularly important to be vigilant about the risk of urban investment debt repayment.2014The Budget Law, revised in, stipulated that local governments could legally borrow through bonds. Since then, the issuance of local bonds has rapidly increased, and the maturity scale has skyrocketed. In addition,2021-2025The maturity amount of annual urban investment bonds is approximately annually3About one trillion yuan. Once urban investment companies with reduced revenue are unable to repay their maturing bonds, local finance will face a dilemma. If taken action, it will exacerbate financial tension; If not taken, it may affect the credit of the local government and affect the relevant financing market. Note: This article only represents the author's personal views and is one of the author's financial observation series. Luo Zhiheng is the Chief Economist and Dean of the Research Institute of Yuekai Securities, and Xu Kaizhou is a Macro Researcher of Yuekai Securities. |
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