The New urbanization must end the Land Finance

The new way of land expropriation must comply with three major principles: first, in line with the pre-determined objectives of public interest; second, due process; third, full compensation. Land finance depends on the rolling development of land, and the rolling development of land based on safeguarding rights is the right way.

Where is the "new" of the new urbanization? There are different answers to this question. But the requirement is clear: the new urbanization must be "new", which is different from the urbanization in the past. As for where the "new" is, it needs to be interpreted from the latest central documents. And different people will make different interpretations. For example, from the decision of the third Plenary session of the 18th CPC Central Committee, we can first read "giving farmers more property rights" and "the market plays a decisive role in the allocation of resources." From the decision of the fourth Plenary session of the 18th CPC Central Committee, we can first read "the rule of law".

These key decision information are very important. For example, from "giving farmers more property rights", we can get the following interpretation: first, many property rights belonging to farmers have not been given to farmers; second, more property rights will be returned to farmers; third, at this stage, all property rights have not been returned to farmers.

Both the central public finance and the local public finance are required to achieve "revenue and expenditure". This is very different from what we usually think of as "revenue and expenditure". The reason why we want to achieve "revenue by expenditure" is actually very simple. The government's revenue is not an end in itself. It is necessary to spend fiscal revenue on the performance of government power in accordance with the provisions of government power. One of the improper practices of the financial departments of our governments at all levels since 1994 is to constantly absorb financial revenue and take this as a matter of course. Only emphasize the obligations of taxpayers, but ignore the rights of taxpayers.

From the point of view of the construction of the local public finance system, it requires the establishment of the new land finance and the exit of the old land finance. The new type of land finance means a new way of land expropriation, while the new way of land expropriation means the end of land finance. In addition to transferring the state-owned land on hand, the government should end its role as the main body of the land market. At this time, the government mainly transfers the existing state-owned land, or obtains tax revenue from other economic entities in the process of buying, selling and transferring land. This kind of behavior is exactly the same as that of the government in other areas of the economy. Under such circumstances, there is no so-called "land finance".

The new way of land expropriation must comply with three major principles: first, in line with the pre-determined objectives of public interest; second, due process; third, full compensation. This means that the government cannot monopolize farmers' land at a lower than the fair price of the market. The United States, Britain and Germany all acted in this way, protecting everyone's property rights and not preventing them from becoming a club of rich countries. As the ancients said, "A gentleman loves money and takes it wisely." Land finance depends on the rolling development of land, and the rolling development of land based on safeguarding rights is the right way.

The Qiuhe incident is one of the most interesting cases of upgrading the level of local infrastructure, changing the image of the city and expanding local financial capacity. Qiu he was promoted all the way from the secretary of the Suqian Municipal CPC Committee to the deputy secretary of the Yunnan Provincial CPC Committee, and his killer mace was his "benevolent government" practice of "serving the people". Qiu he's ruling style of municipal construction is to do it quickly and demolish it quickly. The superficial material achievement of this style is amazing. It is not too much to describe it as "the old look for a new look". However, this kind of "serving the people" is bound to serve only the majority of the people, and the interests of the minority are sacrificed. For example, the interests of demolition households. During his tenure as secretary of the Kunming Municipal CPC Committee, Qiu he asked for the reconstruction and expansion of the second Ring Road to be completed within one year, and there was no time to discuss with the demolition households. This system is called "fragmented authoritarianism". It may be more efficient in doing some things, but in the absence of power constraints, once the harm is caused, it is also to a great extent.

However, for local governments, the temptation of land finance based on the overall low-compensation land expropriation is huge. According to the statistics of the Ministry of Finance, in 2014, the national land transfer income reached nearly 4.3 trillion yuan, and the national land transfer expenditure was 4.1 trillion yuan. Among them: the land transfer income is used for land requisition and demolition compensation, land transfer pre-development, subsidies to land expropriated farmers and other cost expenditure of 3.395237 trillion yuan, land transfer income is 898.793 billion yuan. The proceeds from the sale of land in that year were actually used for 725.861 billion yuan in non-cost-effective expenditure such as urban construction, agriculture and rural areas, and indemnificatory housing projects. All these government-controlled expenditure links are also where the huge benefits lie, not to mention the real estate appreciation, investment projects, new tax revenue and so on brought by the rolling land development, which bring benefits to local finance and local officials. Under such circumstances, if we want to end the land finance, we need the central and local governments to make a huge decision!