Abstract: The taxation in production area of the value-added tax, the consolidated tax payment of corporate income tax, and the final settlement of personal income tax will all bring about the deviation between tax revenue and tax source. To solve this problem and to build a fiscal relationship between local governments with clear responsibilities and balanced financial resources is not only conducive to improving the tax sharing system and the unification of the domestic market, but also conducive to equalizing basic public services and achieving coordinated development of regional economies. Based on China's provincial panel data from 2000 to 2019, this paper examines the mechanism, scale and extent of the impact of the deviation between tax revenue and tax resource of VAT, CIT and PIT on the regional financial equalization. The findings show that this deviation has significantly expanded the local financial gap, and has a greater impact on the eastern provinces, the net tax inflow provinces, and the tertiary industry dominated provinces, while the financial pressure, the development of digital economy, and the reform of“replacing business tax with value-added tax”have all deepened the deviation. Therefore, it is suggested to re-establish the regional distribution system of VAT according to the principle of consumption place, to reform the cross regional income division system of CIT and PIT, to improve the horizontal tax distribution mechanism among local governments, so as to equalize regional financial resources.

Key words: deviation between tax revenue and tax source, regional financial equalization, the principle of product origin, the principle of consumption place, value-added tax