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Audits have exposed the fact that some places have inflated fiscal revenue.

Recently, some provinces have made public the audit reports on the implementation of local budgets and other fiscal revenues and expenditures in 2023 (hereinafter referred to as the audit reports), in which the authenticity of fiscal revenue has attracted attention. This includes the discovery that some places have inflated fiscal revenues and the exposure of their fraudulent methods.

The Guangdong Provincial Audit Report stated that three cities and three counties increased fiscal revenue by 17.101 billion yuan through state-owned enterprises purchasing state-owned assets, affecting the authenticity and sustainability of fiscal revenue.

The audit report of Hebei Province pointed out that one city and seven counties falsely increased fiscal revenue by 2.495 billion yuan through false disposal of public welfare assets, overpayment of state-owned capital operation income or fines and confiscations.

The Sichuan provincial audit report stated that some regions paid the targeted donation funds into the fiscal revenue at the same level, falsely increasing fiscal revenue by 41.5122 million yuan. The Qinghai provincial audit report pointed out that in 2023, the provincial government will recover 20 million yuan of funds that had been allocated in previous years and transfer them to the general public budget, falsely increasing the financial resources for that year.

The Inner Mongolia audit report stated that four leagues and cities collected funds that were not non-tax revenue or collected them first and then returned them, falsely increasing non-tax revenue by 2.8649 million yuan. The Liaoning audit report stated that four cities and 19 counties used fiscal funds to pay for franchise transfers, land transfer fees, and fines.

In fact, the problem of local governments falsely increasing fiscal revenue is an old one. Many experts told Caixin that the main motivation for local governments to falsely increase fiscal revenue is to achieve political achievements, because the fiscal revenue growth index is an important indicator for evaluating political achievements. In recent years, as the contradiction between fiscal revenue and expenditure has increased, some local governments have difficulty balancing budget revenue and expenditure, and they have also used this to raise fiscal funds.

Shi Zhengwen, a professor at China University of Political Science and Law, believes that the inflated fiscal revenue conceals the true fiscal revenue situation, hides the actual fiscal deficit, aggravates local fiscal risks, and interferes with the central government's judgment on the true fiscal situation of local governments. It is easy to mislead decision-making, affect macro-control, and damage the government's credibility.

Experts suggest that in order to curb the practice of inflating fiscal revenue, local governments need to correct their performance view, scientifically and rationally set fiscal revenue indicators, and implement the Budget Law, which states that revenue indicators are only prospective indicators, not rigid task completion indicators, to reduce the practice of inflating local revenue in order to complete tasks. Fiscal and tax reforms should be continuously promoted to increase local autonomous financial resources and reduce the pressure on local fiscal expenditures. On the other hand, relevant parties should strengthen supervision, severely crack down on the practice of inflating fiscal revenue, and strictly hold relevant persons accountable.

In terms of the authenticity of fiscal revenue, in addition to inflating fiscal revenue, in practice some places artificially adjusted the progress of revenue collection or failed to strictly manage it, resulting in some revenue not being collected into the treasury in a timely manner or over-collection of revenue, which also affected the authenticity of fiscal revenue.

The "Audit Report on the Implementation of the Central Budget and Other Fiscal Revenues and Expenditures in 2023" disclosed by the National Audit Office in June this year pointed out that some tax departments collected 54.29 billion yuan more or in advance corporate income tax, consumption tax, land value-added tax, etc. in order to complete their annual tasks; some tax departments delayed the collection of 94.79 billion yuan of corporate income tax, consumption tax, value-added tax, etc. after completing their annual tasks.

According to the audit report of Guangdong Province, 4 cities and 2 counties failed to collect 3.634 billion yuan of fiscal revenue such as land transfer fees in a timely manner. One county failed to timely transfer 154 million yuan of provincial revenue such as provincial education funds and farmland water conservancy construction funds. According to the audit report of Inner Mongolia, 1 league city and 9 banners, counties (cities, districts) artificially adjusted revenue of 426 million yuan by withdrawing funds from the treasury or paying them across the year.

The Shandong provincial audit report pointed out that 30 units had not implemented the separation of invoices and payments, and the units were required to pay the state treasury at a later date according to their needs. Among them, 19 units disposed of 109 million yuan of income in 2022, which was postponed to 2023, affecting the authenticity of provincial revenue. The Liaoning provincial audit report stated that the organization of revenue was not in compliance with regulations. Some cities and counties adjusted their revenue by 411 million yuan, and some cities and counties collected an additional 93.8374 million yuan in land value-added taxes.

The above-mentioned Audit Office report recommends that in terms of fiscal revenue, efforts should be made to strengthen tax collection and management, improve departmental data sharing, plug system loopholes, ensure that all receivables are collected and every grain is stored in the warehouse, and consolidate the recovery trend of fiscal revenue.