| Summary/Abstract |
This article examines non-tax funds in transitional China, with special reference to their impact on local fiscal revenue and local government behaviour since 1994. It is found that official statistics on non-tax funds of local governments have been significantly underestimated because land transfer fees are excluded from those statistics. In addition, the rise of non-tax funds is chiefly caused by changes in the division of central–local revenue and the redistribution of state-owned property rights against a background of fiscal decentralisation. Local governments, functioning like a firm with self-interest, make great efforts to seek non-tax funds, which change the priority order of public services.
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