Should China revisit the 1994 fiscal reforms?
Speaker(s): Dr Ehtisham Ahmad
Chair: Professor Athar Hussain
Recorded on 9 June 2011 in Thai Theatre, New Academic Building.
Does China need to conduct another "fundamental rethink" of the fiscal system as in 1993/4? The 1994 reforms have served the country well, but are inadequate in relation to the needs of local governments, and the stage of development that China now finds itself at. In particular, spending assignments that were not addressed in 1994 need to be tackled, along with own-source revenues to lead to greater sub-national responsibility and accountability, as well as levels of investment needed to maintain sustainable employment opportunities. A comprehensive reform is suggested, including revisiting tax and spending assignments, furthering domestic resource mobilization, as well as a redesign of transfers, budget systems, and development of local and municipal financing mechanisms.
Ehtisham Ahmad, currently at the Asia Research Center at the LSE, and ZEF at the University of Bonn, has held senior positions over the past two decades in the IMF (senior advisor, Executive Board; advisor and Division Chief, Fiscal Affairs Department). He was on the team for the 1990 World Development Report "Poverty", and was director of the Development Economics Research Program, STCERD, LSE 1986-90, and at Warwick University (1980 to 1986). He has participated in or led several Bank and Fund missions to China since 1988. He is co-editor (with Giorgio Brosio) of the Handbook of Fiscal Federalism, and Does Decentralization Enhance Service Delivery and Poverty Reduction? Some earlier books include Theory and Practice of Tax Reform in Developing Countries; 1991 (with Nicholas Stern); Social Security in Developing Countries, 1992 (with Jean Dreze, John Hills and Amartya Sen).