Abstract: With the full implementation of the “Business Tax Replaced with VAT” and local tax system lost the main taxes，property taxes and other taxes are difficult to bear responsibility of local tax system support.Although they are as a direct tax income tax having a higher percentage，they belong to a Shared tax.The local tax system in China is difficult to establish，in addition to the objective conditions such as the economic structure and unreasonable income distribution，mainly because during the tax system construction process，there are many factors hindering the process，such as the lag of the construction of the rule of law，the imperfect supporting system，and the imperfect management mechanism.In this context，starting with the influence of local tax revenue on local financial resources，this paper analyzes the institutional obstacles in the construction of local tax system in China,and puts forward the basic countermeasures.

Key words: tax division system, local tax system, local taxation system tax system construction