Addressing Inequality in the People’s Republic of China

Government spending in the People's Republic of China is largely decentralized, leading to unequal delivery of basic public services across wealthier and poorer provinces. This publication provides policy recommendations such as reforming the personal income tax, introducing gift and inheritance taxes, and implementing a nationwide property tax to broaden the tax base. Recommendations to address the fiscal gap include increasing fiscal transfers to poorer provinces, centralizing certain fiscal expenditure responsibilities, and strengthening local government fiscal revenue.