Budget and the budgetary system of the Russian Federation
Role and importance of the state budget in the national economy in a market economy. Revenues and expenditures of the state budget, their balance and execution problems. Intergovernmental relations: current situation, problems and their solutions.
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Financial aid budgets of other levels
Financial aid budgets of other levels
Regional Development Fund
Activities in the field of regional development
Recycling and disposal of weapons, including the implementation of international treaties
Recycling and disposal of weapons under international treaties
Recycling and disposal of weapons, excluding international treaties
Mobilization preparation of the economy
Mobilization preparation of the economy
The exploration and use of outer space
State support for space activities
Scientific - research and development - work in the field of space activities
Elections and referendums
Cheap loans (loans low)
Other expenses not covered by other sub-
Fund of the Ministry of the Russian Federation for Atomic Energy
Also: Expenses paid to a pension fund from the proceeds of the unified social tax
* Among them: financing the repair work on the most valuable objects of cultural heritage of the peoples of the Russian Federation, of religious significance - 40000.0 thousand rubles, restoration of the castle Sheremetyeva with. Yurino, Mari El Republic - 3700,0 thousand rubles.
** Among them: funding for the training of Russian athletes - persons with disabilities to participate in the Paralympic Winter Games in 2002 in Salt Lake City (USA) - 30000.0 thousand rubles.
2. Characteristics of individual budget levels system
2.1 Federal budget
The federal budget is the first level of the budget system of the Russian Federation. Federal budget - is the main financial plan of the State, approved by the Federal Assembly in the form of federal law. That the federal budget is the main tool of redistribution of national income and GDP through it mobilized the financial resources necessary for the regulation of economic development and the implementation of social policy in the entire territory of Russia. The federal budget is constructed taking into account the need to implement the selected socio-economic strategy. Main directions of budgetary and tax policy for 2002 and the medium term are formed in accordance with the Budget Message of the President of the Federal Assembly of the Russian Federation "On fiscal policy for 2002" and taking into account the implementation of policy objectives, providing for the creation of conditions for continued economic growth, rising real incomes, improve the efficiency of public spending. Fiscal policy for 2002 is built around the objectives and priorities of economic policy in the medium term.
Main objectives of fiscal policy for 2002 and the medium term are:
- Strengthening the role of fiscal policy as a tool to stimulate economic growth;
- Improving the sustainability of the budget system, reducing its dependence on the external environment;
- Ensuring the federal budget surplus under increased debt payments while respecting the original payment schedules on foreign liabilities;
- Improving the quality of public assets and liabilities, improving public debt management.
Peculiarity of the draft federal budget for 2002 is the excess of its revenues over expenditures. Surplus budget policy allows on the one hand ensure that agreed with the monetary policy measures to reduce inflation within the planned limits, on the other hand - to reduce the debt burden of the state.
Formation expenditure budget done on the basis of a conservative estimate of foreign trade market prices for Russian exports. At the same time the federal budget surplus generated due to additional revenues projected under the higher export prices. Thus, in accordance with the Budget Message of the President of the Russian Federation for more revenues to the federal budget and the resulting favorable external environment will be used to repay public debt.
In addition, in 2002, continued to implement measures to consolidate the federal budget of state resources by the inclusion of proceeds from the single social tax in the amount of 257.5 billion rubles. or 2.43% of GDP allocated in accordance with the concept of pension reform in the budget of the Pension Fund for the payment of the basic retirement pension.
According to this approach, the draft federal budget for 2002 generated income amounting to 1995.4 bln. or 18.8% of GDP, expenditure - amounting to 1868.9 bln. or 17.6% of GDP and a deficit of 126.5 billion rubles, or 1.2% of GDP. The volume of non-interest expenses of the draft federal budget is estimated at $ 1579.1 bln. or 14.9% of GDP.
According to the current tax policy aimed at reducing the tax burden of a reduction in the volume of government budget, which includes in addition to the consolidated budget of the budgets of the state funds.
Due to the fall of the resource base of the consolidated budget level of non-interest expenses in 2002, a few drops due to reductions budgets of the Russian Federation. At the same time, the reduction will be compensated from the federal budget at the expense of funds allocated under the financial aid budgets of other levels.
The main objectives of tax policy in 2002 is to reduce the tax burden on the economy, expanding at the expense of the tax base budget, the creation of incentives for withdrawal of income from the shadow economy. Also provided in the 2002 fiscal policy measures aimed at stimulating the internal factors of economic development, which in the coming years will have a decisive influence on,economic,growth.
Achieving these objectives is provided to carry out due to:
- improve tax legislation, improve the stability and transparency of the tax system, expanding the tax base, reduce illegal trafficking;
- Continue to reduce the tax burden, especially on law-abiding taxpayers by reducing the tax benefits, eliminate certain taxes.
Pursuant to the objectives in 2002 is reducing the tax burden by 1.8% of GDP, as well as the creation of tax incentives to stimulate investment, enhancing the sources of internal development, reduce dependence on foreign economic conditions. In this regard, in 2002, provided the following key changes in tax policy:
1. Reduced rate of tax on profits from 35 to 24% with simultaneous abolition of all tax breaks that in addition to reducing the tax burden is aimed at developing entrepreneurial activity and investment activity in the country. They also provide removal of restrictions on assignment taxpayers to expense costs associated with the extraction of profit, including advertising costs, health and property insurance, liberalization of depreciation policy, etc. There is also the inclusion of costs in organizations spending on natural resources, which will compensate part deductions for recovery of the mineral resource base remaining in the moment businesses. Implementing measures to improve the income tax will reduce the tax burden on the taxpayers of $ 197.8 billion, or 1.9 percent of GDP.
2. Introduced a tax on mineral extraction and simultaneously discards currently in the subsoil use tax, deductions for recovery of the mineral resource base and the excise tax on oil. This will simplify the tax control, including transfer pricing in the oil sector, by establishing specific rate per 1 ton of crude oil varies depending on the level of world prices. Changing the order of taxation of subsoil use in reducing the tax burden will not lead to loss of revenue of the budget system.
3. Benefits are canceled upon payment of value added tax tax-related work on the construction of residential houses, produced with the assistance of the budgets of all levels, provided that such funds are not less than 50% of the cost of these works, medicinal products, medical devices and equipment (except essential), media products.
4. Indexed specific excise rates by 12 per cent on all excisable goods based on the projected average rate of inflation in 2002. In addition, benefits are canceled when levying excise duty on the implementation of dry gas from the Russian Federation.
5. Given the projected growth of prices indexed specific tax rates for land tax (12%), payments for use of water bodies (average 2.1 times) and Forest Fund (12%).
In terms of reducing the tax burden in 2002 provided further measures to improve the collection of tax revenues by simplifying the tax system and improve tax administration. If in 2001 the collection rate should be improved compared to the previous year by 2.1 percentage points to 88.8%, while for the coming year is expected to further increase this figure, the value of which will be 90.6 percent.
In 2002, will continue to implement measures to restructure the tax arrears to the federal budget, which positively affected the financial position of taxpayers and budget revenues. Performing taxpayers according to the approved terms of the restructuring of the restructured debt repayment schedules and will provide ongoing payments in 2002 revenues to the federal budget in the amount of 7.9 billion rubles.
Pursuant to the Budget Message of the President of the Federal Assembly of the Russian Federation "On fiscal policy for 2002" in the project federal budget for 2002 envisages an increase revenues derived from the use of federal property. To solve this problem, the system provides for the establishment of state asset management, as well as restoring order in the use of real estate assets in the management of the state enterprises and institutions. To this end, federal budget revenues in 2002 will take into account the funds received by ministries, departments, agencies and organizations in the form of rent for the use of federal real property.
Due to the measures taken to improve the tax policy in 2002, there have been changes in the structure of the revenue base budget system of the Russian Federation. In connection with the reduction in income tax rate reduced revenue base budgets of subjects of the Russian Federation.
In order to generate the revenue base budgets of the Russian Federation, since 2002, provided for transfer in full revenues of regional budgets revenues from income tax receipts from individuals, payments for the use of water resources and forest fund, tax on the extraction of common minerals. Enrollment ratios in the federal budget tax on mining, as well as federal tax rate on profits taken into account in the amounts established by the relevant chapters of the Tax Code of the Russian Federation. The remaining specifications of distribution of tax revenues to levels of budgetary system maintained at operating in 2001.
Fiscal policy in the next year is characterized by restriction level of non-interest expenses, whose share in GDP is provided at a rate of 12.46%, which is below the expected value of the current year.
At the same time, in real terms, interest expenses will increase next year by 5.3%, while the share increase non-interest expenses in the budget spending by 1.3 percentage point. Level of non-interest budget expenditures next year in comparable terms will decline and reach 23.4% of GDP against 24.6% as expected in the current year assessment and 24.0% in 2000, which is caused by a reduction of the revenue base of the regional budgets.
Despite holding a tight fiscal policy in the coming year, the expenditure of the federal budget is formed taking into account the need to achieve critical social and economic problems.
In 2002 identified the following priority areas of fiscal policy:
The implementation of the judicial reform:
As part of the reform of the judicial system is an additional allocation in the amount of 860 million rubles. an increase in staff numbers of judges (250 pcs.), administrative staff of arbitration courts in the amount of 1,000 units. court staff, and increase the number of associate judges in courts of general jurisdiction in the amount of 2785 units., increasing the number of justices of the peace in the amount of 2097 units.; introduction of jury trial in 83 subjects of the Russian Federation. They also provide additional funds for repair and overhaul of buildings arbitration courts and courts of general jurisdiction, wage indexation judges, judges lifelong maintenance and other activities.
Implementation of military reform.
In the federal budget for 2002 takes into account funds for the first phase of the reform of monetary remuneration to the terms and conditions of equating military pay and equated to certain categories of public servants monetary maintenance, providing salary increases for military position (salary) to the level of salaries civil servants from 1 July 2002. The second phase of activities - equating salaries for military rank to the monthly premium for the qualifying level corresponding categories of federal civil servants to be implemented from 1 January 2004.
Stages of reform monetary allowance will evenly distribute the load on the federal budget in the period 2002-2004 and to provide financial resources to implement the activities approved by the Security Council of the Russian Federation.
Formation expenses for the current contents of the "power" block provides a reduction in the number of personnel of ministries and departments, not only within the framework of the decisions taken, but with the additional reduction in troop strength. In order to ensure a balanced budget policy in 2003 and the medium term, in 2002, accounted for an additional reduction of the previously provided for 2003-2004.
The magnitude of this reduction simultaneously imply financial support of social protection measures discharged servicemen and persons equated to them. In this regard, the costs of implementation of military reform in 2002 provided in the amount of 16.4 billion rubles. That 3.9 times more than in the current year. Will increase as the costs of paying military pensions and other equivalent categories by 15 billion rubles. in connection with the reform of the monetary system and allowances by 2.8 billion rubles. - In connection with the downsizing.
Implementing social reform.
Fiscal policy in the social sphere is aimed at providing financial resources, basic services, especially education and health, the reduction of social inequality through the reallocation of state social spending in favor of the most vulnerable groups.
A key element of social reform in 2002 is to increase the growth of incomes of the population and reduce their differentiation on the basis of increased wages, better pensions in the implementation of the pension reform and strengthen the targeting of social support.
As a phase of social reform in 2002 is planned to implement indexing wages of public sector employees paid by ETC. The planned changes in the system of remuneration of employees of budget organizations allow an average of 1.89-fold increase in the tariff part of the wage fund public sector workers paid by ETC.
Implementation of 2002 social and pension reforms will set the same, as of January 1, 2002, the level ETC discharge rate of the first and basic part of the pension, made friends with a ratio subsistence level and the base part of labor pension ratio subsistence minimum and discharge rates 1 ETC. In the future, it will be indexed and the level of the basic pension rate 1 ETC discharge only in line with inflation.
In 2002, plans to carry out the first step in the implementation of the pension reform. In this regard, in the coming year provides for enrollment in the federal budget revenues of the unified social tax and the direction of these funds in the budget of the Pension Fund for the payment of the basic retirement pension. Volume to the federal budget, and paid out of his assets in 2002 amounted to 257.5 billion rubles.
Formation of federal targeted programs.
According to the Budget Message of the President of the Russian Federation in 2002 sharply reduced the list of federal programs funded from the federal budget. Instead of 133 federal programs operating in the current year, the next year in the draft federal budget accounted for 48. A number of program activities that are not included in this list, in 2002 will be included in the budgets of federal executive bodies or consumable items of the federal budget.
Performed a qualitative revision programs. Principled position was exclusion from the "Other Expenses" costs associated with the current contents of state customers. In the draft federal budget for a new approach to the formation of regional programs. In addition to the sharp reduction in the number of regional programs produced ordering costs with federal and regional significance. Funding for federal facilities regional programs included in the public investment program, and objects related to the regional and municipal ownership, are included in the Regional Development Fund, which is dedicated to a special sub-section of the federal budget, "Financial Aid subjects of the Russian Federation." This will avoid duplication in financing facilities through various funding sources and to concentrate resources on priority activities programs. With most of the regional development programs, funded by the Regional Development Fund in 2002, will focus on the financing of housing and communal services.
The main functions of the federal budget are:
· redistribution of national income and GDP;
· government regulation and stimulate the economy;
· financial support for social policy;
· control of education and the use of a centralized fund of funds.
Before the transition to market relations of the USSR state budget revenues based on cash savings of public enterprises. They occupied more than 90% of the total budget revenues and mainly consisted of two payments - VAT and payments of income [17, p. 155].
In the transition to market mechanisms revenue budget system has undergone fundamental changes.
Concrete understanding of the sources of formation of the federal budget can be obtained from the analysis of the main provisions of the federal budget for 2002. It was approved in the amount of expenditure 1,947,386.3 million and income of $ 2,125,718.2 basis of projected GDP in the amount of 10,950 billion rubles and the inflation rate of 12.0%.
GDP, billion rubles.
Inflation,% (December 2002 to December 2001)
2.2 Budgets of the Russian Federation
Budgets of the Russian Federation includes the second level of the budget system. Budget of the Russian Federation - is a form of education and spending money intended for the tasks and functions related to the subject matters under the jurisdiction of the Russian Federation [3, Article 15]. Budgets of subjects of the Russian Federation - one of the main channels of communication to the public the final results of production. Of these budgets is largely funded the development of the production sector industries, primarily local, light and food industries, public utilities, transportation and communications. Are important in the implementation of the budgets of the national and social problems, especially in the allocation of public funds for the maintenance and development of the social infrastructure of society.
The basis of the distribution of financial resources between the national levels of government based on the principles of independence of budgets, their state aid territorial formation sources of their income. Based on these principles, the regional budgets revenues generated from its own sources of revenue and regulation.
Own or fixed incomes represent funds belonging to the subject of the budget law, ie they are fully or firmly fixed fraction permanently enter the appropriate budget, bypassing higher.
By regulating the income relates the totality of funds transferred from the higher to the lower budgets to control (balance) their costs and revenues.
Federal law on the federal budget for each year contains a list of regulatory and federal taxes and fixed payments RF subjects.
Since 1994 in Russia as the regulatory revenue budgets of the Russian Federation began to use the proceeds of the Fund for Financial Support of the Regions. Financial assistance from the Fund for the regions to learn the status of "a region in need of support," or "in the region, particularly in need of support."
Status "in the region in need of support" given region who shower budget revenue in the planned year less per capita fiscal revenue in all regions of the Russian Federation.
Status "in the region, particularly in need of support," is given to those regions in which the amount of budget revenues than projected volume in the planned year of budget expenditures.
Given these two statuses Fund is divided into two parts, respectively, of which funds are allocated regions in need of support, and regions, especially in need of support. Allocation of funds from the region said parts of the Federal Fund for Financial Support of the Regions in accordance with their status is based on a fixed percentage of each region in the total amount of funds relevant part of the income.
The advantages of this method of regulation lies in the fact that the funds allocated to subjects based on a single methodology for all budgets, taking into account the low income population living in the territory. Through this funding federation subjects performed on an objective basis - common to all regions formula for calculating the allocation of funds from the general fund of financial support Volume Federal Fund for Financial Support of the Regions for the year 2002 amounted to.
2.3 Local Budgets
Local budgets in the third level of the budget system of the Russian Federation. St. 14 RF BC defines municipal budget (local budget) as a form of education and spending money intended for the tasks and functions related to matters under the jurisdiction of local government. Local government bodies us has an important task for the implementation of social policy. Funding for social services for the population in large part carried out at the expense of local budgets.
Most pronounced effects of economic and social processes are reflected in the expenditure part of local budgets. Increase in costs related to increased maintenance costs of housing and communal and cultural purpose, to landscaping, new construction. Also in recent years, is widely practiced transfer various departmental facilities such as housing, social and cultural institutions, public service organizations in the municipal property, which leads to a significant increase in budget spending.
It should be noted that the cost structure of certain types of local budgets is not uniform and depends on the economy and the jurisdiction of its authorities to the various territorial entities. So, the city authorities subordinate enterprises significant part of the local industry, housing and household services, transport, so the share of allocations for the national economy in the expenditure of these budgets is the most significant and greater than 40%. The jurisdiction of the same district and village authorities are mainly socio-cultural institutions in these budgets, the vast majority of spending in the financing of social and cultural activities, it is about 60-80% of the costs.
Revenues of local budgets, as well as budget revenues consist of subjects of the federation and its own governing. General scheme and regulatory own local revenues can be represented as diagrams [2, p. 33].
2.4 Intergovernmental relations: current situation, problems and their solutions
All budgets are included in the national budget system interact within the intergovernmental fiscal relations.
Intergovernmental relations - is the relationship between the authorities of the Russian Federation, bodies of state power of subjects of the Russian Federation and local authorities associated with the formation and execution of the respective budgets [2, p. 28].
Intergovernmental relations are based on the following principles:
· distribution and retention of expenditure budgets for certain levels of the budget system of the Russian Federation;
· delineation of regulatory income levels of the budget system of the Russian Federation;
· equality rights of subjects of the Russian Federation budget, budget equality rights of municipalities;
· leveling up minimal budgetary provision of the RF subjects and municipalities;
· equality for all budgets in the relations of Russia with the federal budget, local budgets equality in relations with the budgets of the Federation.
Based on these principles, we can say that the basis of intergovernmental relations in Russia is fiscal federalism. In a strictly scientific sense, the theory of fiscal federalism, as well as the canonical definition does not exist. However, analysis of the construction of fiscal systems in the federative structure reveals the following provisions, which together express the essence of the standard model of fiscal federalism [10, p. 19]:
· coexistence of several levels of fiscal system;
· legislative or contractual allocation of powers and responsibilities of each level of government for specific areas and activities in the relevant territory;
· the presence of stable representations of the magnitude of the necessary expenses for the implementation of each level of the power of his authority and responsibility;
· the use of reliable and recognized members of the Federation of accounting methods for their features adjustment to costs;
· assigned to each level of the budgetary system of tax and non-tax revenue sources;
· establishing a classification of federal and regional budgets for special financing products such directions of regional policy, the payment of lower budgets insufficiency of their own funds to cover the legal costs allocated, implementation of programs to support the development of individual regions and the adoption of measures to support the depressed areas, etc.
According V.Leskina and A. Shvetsov, all these characteristics of the standard model of fiscal federalism undergo inevitable changes in its adaptation to a specific country. "Standard" should be adapted to the characteristic only for this country and for this period of its history to the set of interrelated problems of social, economic and regional development.
Russian model of fiscal federalism formally constructed as described "standard." It was based on the declared constitutional allocation of authority between the Federation, its subjects and municipalities and to come from the statutory structure of the separation between all levels of government taxes collected in the country. In the framework used "formulaic", apparently free from subjectivity fiscal equalization mechanism through federal transfers RF subjects [10, p. 20].
The main problem of Russian fiscal federalism is its low efficiency. One of the main reasons for this is a very significant differentiation of regions in terms of income. So according to the Ministry of Finance, 66% of the tax potential of the country is concentrated in 12 regions of Russia. It turns out that these 12 subjects receive on its territory two-thirds of all taxes of the country, and 76 subjects - one-third. Deepening horizontal differentiation by income increases the amount required to pull up to the average level of regions. Since inter-regional differentiation increases, the increasing amount of resources will go to poor regions. The existing method for detecting transfers leads to the fact that while reducing their own budget revenues subject of the Federation has more right to receive funds from the federal budget. Existing mechanism for allocation of transfers encourages regions to reduce their revenue base. The principle of equalization of expenditure in the absence of incentives to increase their own income determines the increase in the dependent moods regions.
In such circumstances, the need to radically change transfer policy aimed at increasing financial independence and responsibility of the regions, the promotion of their own efforts to overcome the fiscal crisis, enhancing the revenue base as a regional and the federal budget, accelerating socio-economic reforms.
To enhance the region's interest in filling the federal budget revenues should be a direct correlation between receipt of federal financial assistance from the center of power of the job to raise revenues in the federal budget.
Federal center should develop and bring to the regions program recommendations fiscal recovery, following which will be essential for the provision of financial assistance. Basic settings thus should be:
· share of spending priorities (health, education, social security, etc.) in the regional budget expenditures;
· proportion of the population for housing and communal services and public transport;
· an administrative price controls;
· presence and intensity of restrictions on access to the regional markets of domestic goods and services;
· marginal cost of borrowing and the amount of tax exemptions and incentives.
Improvement of regional budgets should help streamline the budget process in the regions: ensuring "transparency" of the budget, their compliance with federal classifier, the consolidation of the budget of the regional budget funds, treasury execution of budgets.
An important condition for the proper functioning of intergovernmental relations is the financial control by the federal government for the correct and appropriate expenditure of regional budgets. Necessary to restore the practice of performance audit regional budgets that receive funds from the federal budget on channels of intergovernmental relations. Required an assessment of the capacity and utilization of the revenue base of the region, including those in its possession and disposal of natural resources, real estate, etc. Similarly, must be declared and expenses because there may well be situations where the region applying for financial aid, wasteful use of their funds, "living beyond its means."
Logical development of the above requirement may become mandatory confirmation by the relevant authorities before the actual effectiveness in the use of allocated funds. Such official confirmation could be additional grounds for the next portion of support tools. It is important not full expenditure of funds received, namely the impact of their use to improve or stabilize the region-specific parameters (poverty reduction, job growth, etc.).
Great significance for the modernization of intergovernmental relations is changing the subject of public financial support. They should not be vague "socio-economic development of the region", and the specific tasks that can be solved with tangible results within the time and funds allocated by the federal budget, with consolidated resources of the region. Initiative to address such problems, as well as a willingness to take full responsibility for the proper use of budgetary funds and for the achievement of the stated results, should come from the potential recipients of support - Management of the Federation and municipalities.
Reform of intergovernmental fiscal relations in 2002 based on approved by the Russian Government Development Programme for the period of fiscal federalism until 2005. The main objective of the program is to establish a clear division of expenditure and revenue authority to provide financial independence and responsibility of regional and local authorities, increasing their interest in the effective management of finances, support the economic development of the territories. The concept of intergovernmental relations envisaged in 2002, is the first step in implementing this program.
In 2002, the alignment of the budget of the regions (municipalities) shall be implemented at the same time creating incentives for the implementation of the regional (local) level of structural reforms.
The main part of the financial assistance to the subjects of the Russian Federation will be provided through the Fund for the financial support of the Russian Federation (FFSR), which, as in previous years, will be formed in the amount of 14% federal tax revenues (excluding controlled by the State Customs Committee), calculated according to the conservative variant projections. The projected rise FFSR size relative to GDP and total revenues of the consolidated budget of the Russian Federation will allow for more effective alignment of budgetary security of the Russian Federation.
In order to achieve parity in the revenue base formation between the federal budget and the budgets of subjects of the Russian Federation in the draft federal budget for 2002 provided subsidies to stabilize the revenue base budgets of the Russian Federation in connection with the adoption of the Tax Code of the Russian Federation in the amount of 3.0 billion rubles.
According to the draft Development Program of fiscal federalism in the Russian Federation for the period up to 2005, starting next year, as part of the financial assistance of the Russian Federation provides for the establishment of the Fund co-financing of social expenditure. The fund will be used to support priority, socially significant costs in terms of structural reforms. In 2002 the fund in the amount of 5.0 billion rubles. provided send a partial refund on a pro rata basis, the consolidated budget expenditures of the Russian Federation on the provision of housing subsidies to the population for housing and communal services. This will accelerate the transition to a new system of payment for housing and communal services, improve social protection of the population in the reform, to ensure interest of the Russian Federation in compliance with federal standards and thus create conditions for implementation of the program of modernization of housing and communal services.
In order to ensure the reform of intergovernmental fiscal resource relations total financial aid budgets of other levels in 2002 increased compared to the current year to 166.3 billion rubles. to 244.2 billion rubles. While the share of financial aid in the total expenditures of the federal budget will increase from 13.9% to 15.2%, ie the highest among other expenses pace.
To compensate for the loss of revenue budgets of the regions in 2002 due to the introduction of new tax legislation Federal Fund for Financial Support of the Russian Federation increased by 8 billion rubles. This will ensure a share of the revenue budgets of the Russian Federation in the total revenues of the consolidated budget in view transmitted from the federal budget financial support to the regions in the amount of 51.0 percent.
3. Conditions of education and ways deficit reduction
The state budget, as well as any balance involves alignment of revenues and expenses. However, as a rule, when adopting the budget projected income and expenditures do not match. Excess of revenues over expenditures forms budget surplus (or surplus), the excess of expenditure over income - the budget deficit (lack of). Typically, the budget deficit is expressed as a percentage of GDP (GDP).
Undoubtedly, the budget deficit - for the state undesirable phenomenon: its financing on the basis of the issue of money is guaranteed to lead to inflation, using the equity funds did not increase in public debt. Nevertheless, the budget deficit can not be unambiguously attributed to the category of emergency, catastrophic events, as can be different quality, nature deficit. It can be associated with the solution of acute social problems, or with the need for large-scale public investment in economic development, and if the deficit is not a reflection of the current crisis of public processes, but rather becomes a consequence of the desire of the state to ensure the progressive changes in the structure of social reproduction.
If in the past fiscal deficit arose quite rare and was usually associated with emergencies, especially wars, today it has become typical for the majority of the market economy [5, s. 278].
Budget deficits of some countries (% of GDP)
The budget deficit is due to many reasons both objective and subjective. Most often - because of the inability to mobilize the necessary revenues as a result of a slowdown of production, low labor productivity and other causes of the instability of the economy, reducing efficiency. The reason for the budget deficit lies in the increase in expenses, excluding financial capabilities of the state, in the lack of feasibility and cost-effectiveness. High level of non-production costs (military spending, the contents of the administrative apparatus, losses of enterprises, etc.) leads to a "decumulation" budgetary funds, and not to an increase of social wealth. Negative impact on the budget balance have inflation, monetary loosening and settlement systems, inappropriate tax credit and investment policy.
However, the budget deficit can not be the indicator of the state of the economy and a balanced budget does not mean prosperity. Today, many economists proceed from the fact that during recessions perfectly valid significant budget deficit, and a small flaw is not dangerous and can exist for quite a long time. The International Monetary Fund recognizes valid deficit in the range of 2-3% of GDP [5, s.278]. Problem becomes significant and long growing deficit, which may result in uncontrolled inflation.
We have already mentioned that the budget deficit is not always a negative phenomenon. Fiscal imbalance can be useful in terms of stabilizing the economy. Planned discrepancy between income and expenditure of the state budget can be used as a tool to fight inflation and recession. Conversely, a strong commitment to a balanced budget would require higher taxes and lower public spending during the economic downturn and as a result would lead to a further reduction in aggregate demand.
Economists suggest three main approaches to the problem of balancing the budget:
The first approach is related to the orientation of the annual budget balance, which means listing the main purpose of its balance public finances. Such an orientation of fiscal policy negates its countercyclical stabilization and character. Annually trimmable budget actually exacerbates business cycle fluctuations, causes an acceleration of inflation. This is because in a depression, unemployment holds significant reduction in income that continues to cause a decrease in tax revenues to the state treasury, and in such a situation, the government, seeking to balance the budget, must either raise taxes or cut government spending, or use a combination of these two measures. However, these measures are restraining nature: each further reduces the total demand, which leads to a further reduction of public production.
In the opposite case, when the state budget surplus in terms of inflation and income growth, to prevent surpluses, the government must either cut taxes or increase spending, or do both simultaneously. In this case, a balanced budget is achieved at the cost of inflationary spiral.
The second approach involves the achievement of a balanced budget over the economic cycle, while it does not have to be balanced each year. In this case, the allowed annual budget deficits and surpluses, and fiscal policy is used as both a tool and a countercyclical regulation and balancing the budget in the long run. The rationale for this concept looks simple and attractive. In order to resist the downturn, the government should cut taxes and increase spending, deliberately causing deficiency. During the subsequent recovery and manifestations of inflation is necessary to raise taxes and cut government spending. Arising on this basis a budget surplus may be used to cover public debt incurred during the recession. Thus, the government can not balance the budget on an annual basis, and in a period of several years.
Proponents believe that we should try to balance the budget over the business cycle. From the point of view of the Keynesians, this can be achieved through deliberate fiscal policy. Monetarists offer adhere rational monetary policy. Advocates of this theory believe that the budget is an instrument of counter-cyclical policies.
However, the key problem with this approach, despite its visual appeal, it is apparent simplicity. The fact that the ups and downs in the business cycle vary in depth and duration. Long and deep recession may be replaced by short-term and a slight rise, and vice versa. And in fact, in both cases there will be a cyclical imbalances in the state budget.
A third approach to the regulation of the state budget related to the concept of functional finance, the essence of which is to ensure that fiscal policy was seen only as a tool of economic policy of balanced development of the national economy. The question of an annual or cyclical budget balance - minor. The main purpose of public finances is macroeconomic stability, and balance the budget is considered as one of the constituent elements of such stability. In accordance with this approach, economic development can be accompanied by budget deficits or surpluses. It is assumed that macroeconomic stability and economic growth will automatically have a positive impact on overcoming the budget deficit and reduce public debt.
Types of budget deficits
Nature of the budget balance - deficit or surplus - defined the state of the overall economy. For a given amount of public expenditure and tax rate this fiscal balance depends on the scale of national production. The more you produce, the higher tax revenues. At the same time, government spending (defense, social services, management) depend little on the level of income [5, s.279]. Thus, at low levels of income will be a budget deficit at a high - a budget surplus [5, s. 279].
Or that budget balance is not always evidence of changes in the macroeconomic situation in the country, it may be a consequence of the Government's fiscal policies to address those and other macroeconomic challenges.
In order to highlight the impact on the fiscal balance targeted interventions government used "full employment budget" - the state budget in the functioning of the economy in the natural level of unemployment.
Full employment budget deficit (structural deficit) characterizes the difference between revenues and expenditures of the state budget for a given level of taxation and public expenditure and potential GDP, corresponding to the natural rate of unemployment. Structural deficit - the excess of income over expenditure caused state policy aimed at increasing spending and tax cuts to prevent recession and economic recovery.
Difference between the actual budget deficit and deficit full employment is called cyclical deficit. Cyclical deficit - a deficiency caused by the decline in production, the actual unemployment exceeding its natural rate, resulting in a narrowing of the tax base, increase social spending and maintaining socially necessary sectors.
Height structural deficit means that the government conducts expansionary policy: increasing spending and reducing taxes, which causes an increase in aggregate demand and a positive effect on output. Reduction of the structural deficit, by contrast, shows an deterrent policy.
Also depending on the ongoing budget deficit fiscal policy can be active or passive.
Active deficit caused by state policies aimed at increasing spending and tax cuts, which is a way to increase economic activity.
Passive deficit caused by a reduction in public revenue as a result of the fall in economic activity.
The budget deficit has, in turn, impact on the monetary economy and the functioning of the economy as a whole. Under the conditions of existence of the budget deficit forced the government to seek funds to cover it. Among them the most important are money printing and government borrowing.
Financing of the budget deficit
As mentioned above, the budget deficit must be financed. Government spending, not having under a revenue base, may be covered by printing money, borrowing from the central bank, loans in the private sector and foreign borrowing. Deficit impact on the economy is largely dependent on the method of financing.
Issuance of money is the easiest way to cover the budget deficit. Most of the countries with the transition from gold to paper currency once used an additional issue for these purposes. Government most often used this tool in critical situations - in time of war or prolonged crisis. Excess emission is widely used now in many developing countries and countries with economies in transition. This issue leads to very negative consequences for the economy. Develops uncontrolled inflation undermined incentives for long-term investments, savings devalued people and businesses rapidly declining rate of the national currency, in the end, it all leads to reproduction of the budget deficit.
To maintain economic and social stability of the government try to avoid undue money issue. For this purpose, in a market economy integrated special unit fuse: constitutionally fixed in most of the issuing bank's independence from the legislative and executive branches. He is not obliged to fund the government, so put a barrier runaway inflation, which could begin if money were printed at the request of the government.
The most reliable source of financing the budget deficit are government loans, which are divided into short-term (up to 1 year or 3 years), medium term (3-5 years) and long term (over 5 years). They are implemented in the form of the sale of government securities, loans from non-budgetary funds and procedures for obtaining loans from banks. Government loans are safer compared to emissions, but they have a negative impact on the economy. First, in some cases, the government has resorted to forced placement of government securities, which distorts market forces and motivation behavior of economic agents. Second, even with free accommodation, when the government creates sufficient incentives for the purchase of legal and physical entities of government securities, it enters into competition with private entrepreneurs for funding. Thus there is a reduction in the supply of credit resources, as government securities divert part of available funds. Along with this increase in demand from the government for funds leads to higher interest rates, and the consequence is a reduction of investment in the real economy. The result is a "crowding-out effect" of private investment. However, as confirmed by the empirical data, this effect is most obvious manifestation of the negative and with limited resources and a high level of employment, whereas the excess resources and appropriate monetary policy instead of "crowding-out effect" with an incentive to investment activity.
Solving the problem of the budget deficit and other socio-economic problems through government borrowing raises the national debt. Government debt - the sum of the debt issued and outstanding government loans. Depending on the scope of government debt is divided into internal and external.
Domestic public debt is the result of placing on the domestic market for government loans. They are executed by the issuance and sale of government securities. Government securities are divided into: short-term treasury bonds (with a maturity of up to 1 year), medium - notes (up to 5 years) and long-term bonds (over 5 years). Major holders of government securities are government agencies and foundations, central and commercial banks, other financial institutions, population. The share of government securities up to 90% of the total public debt of developed countries.
External debt occurs when the state mobilization of financial resources residing abroad. External debt holders are companies, banks, government agencies of different countries as well as international financial institutions (International Bank for Reconstruction and Development, International Monetary Fund, etc.).
External debt burden is heavier than the burden of domestic debt. To cover the country's external debt requires foreign currency for which you want to reduce imports and increase exports, while revenues are not for development purposes and to repay debt, which slows economic growth and reduces the standard of living.
Public debt, especially if its growth, causing some negative consequences for the national economy. Consider the main consequences of the accumulation of public debt. First, the national debt leads to a redistribution of income among the population in favor of holders of government securities, which tend to be the most propertied part of society. In turn, this leads to a deepening of social stratification and social tension. Second, the search for sources of repayment requiring higher taxes and increased state intervention in the economy, which affects the economic activity. Third, the possible arrangement of the debt burden on future generations. If the government loans were spent on current consumption rather than investment and modernization of production, the proceeds of which would enable it to pay off debts growth debt and interest thereon will lead to lower growth and limit consumption in the future. Fourth, rapidly growing interest costs all the more difficult reduction of the budget deficit, since interest payments on government debt turn into new spending budget, new loans to settle old debts. Fifth, the growth of external debt reinforces dependence on other countries, which limits the ability to conduct an independent foreign policy in order to ensure their own interests. Also a significant and growing external debt causes significant difficulties in obtaining new loans....
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