To a large extent, a change of the state’s fiscal regime would help to reshape governing institutions of it. Therefore, it is critical to restructure the fiscal regime in the enterprise of state-building. The history of western state-building had experienced two significant fiscal transformations, i.e., from 'domain-state' to 'tax-state' and then to 'budget-state'. A budget state is one governing the extraction and deployment of financial sources according to modern budgeting institution. It holds two basic characteristics such as fiscal centralization and budgetary supervision by the legislature. With the establishment of budget state, the governing of these states had become more efficient and accountable. China, since the 1978 economic reform, has been gradually transformed from an 'owner-state' to a 'tax-state'. With the initiation of the budget reform since 1999, China has been moving toward a 'budget state'. However, for China to be a budget-state, there are many challenges ahead. While budgetary supervision must be taken into a serious consideration, fiscal centralization needs to be further strengthened.
Journal of Public Administration
Fiscal Transformation, State-building, Budget State