Abstract: Based on the theories of political incentive and new fiscal centralization, this paper conducts an empirical analysis of excess revenue of local governments by making use of the provincial panel data from 2000 to 2012. Under the promotion incentive, local governments will tactically affect the planned GDP growth rate on which the budgeting is based and the core index (namely the actual GDP growth rate) on which the government officials performance assessment is based. Thus, GDP growth beyond the plan lays the economic foundation for excess public revenue. After the reform of tax distribution system, the central government has strengthened fiscal centralization, so the local governments under tremendous fiscal pressure have to improve the efficiency of tax collection and management. If developing high-tax industries can bring about tax growth beyond budgeting, the local governments would adjust the budget made at the beginning of the year in order to pursue overspending. The empirical result indicates that the degree of non-agriculturization is negatively correlated with excess revenue. Therefore, it is necessary to enhance the supervision function of the National People’s Congress when perfecting the achievements appraisal system for government officials.

Key words: promotion incentive; grabbing hand; excess revenue of local governments; modern public budgeting