MAINLAND CHINA TAX-REVENUE AND EXTRABUDGETARY FUNDS

Since the initiation of reform and opening-up policies, mainland China 's enterprises have been asked to pay taxes instead of continuing to d eliver a portion of their profits to the state. At the same time, loca l governments have also increased their extrabudgetary funds through t axation. In the process of instituting the taxation system, the centra l government has kept most of the financial power in its own hands, co mpletely deviating from the new economic policy of allowing local gove rnments to enjoy greater autonomy. On the other hand, local government s have taken advantage of the new taxation system's loopholes to trans fer part of their tax revenue into extrabudgetary funds and using thes e funds to support state-owned enterprises in their own areas. If this phenomenon develops unchecked, the central government will have diffi culties in exercising effective financial control, although its tax di stribution system, which was implemented at the beginning of the 1990s , aims to consolidate its financial power.