Реферат: Russian Federation Country Study. A Public Finance Perspective
Recent attempts to Improve Revenue
Decree No 1212 of August 18, 1996 is
designed to improve tax collection by preventing tax evasion and streamlining
cash and non cash turnover. Among other measures, the decree orders enterprises
in arrears of payments to the government to open settlement accounts in banks
or credit institution within the Russian Federation. Those accounts are
referred to as accounts of enterprise in arrears. When requested by the appropriate
tax authorities, banks and other credit organizations are required to provide
data about the transaction of enterprises holding these accounts. Taxation
organ may refuse to register the account of an enterprise in arrears in case
there are no funds available on the correspondent account of the bank or other
credit organizations. An interesting aspect of this decree is that the
government finally began to crack down on misrepresentation "in case of
noncompliance with this requirement or intentional provision of false
information in the notice submitted to taxation organ enterprise in arrears
that had performed the transactions in question will be fined by the taxation
organ in the amount of the transaction value". It has proposed to improve
the tax system by scrutinizing financial transactions through banks. If an
enterprise opens a bank account, the bank or other type of credit institution
must immediately inform the tax organs about the accounts for tax purposes.
Such tax policy will let the tax agencies observe tax payments more efficiently
as everything will be recorded.
Presidential Decree No 1212 of August 18,
1996 also introduced policies concerning cases containing the circumstances
stipulated in the Law of the Russian Federation on Insolvency (Bankruptcy) of
Enterprises, the Federal Department on Insolvency (Bankruptcy) at the State
Property Management Committee of the Russia Federation shall file with
arbitration court request to institute proceedings on insolvency (bankruptcy)
against enterprises that have repeatedly violated this Decree during one
calendar year. As it was with collective farms and state farms, enterprises can
just change their names and continue to evade taxes. An important issue related
to insolvency is loss of massive amounts of jobs and what will workers and one
enterprise" towns do for a living and revenue.
On the bases of the decree, the government
has widened its crackdown on tax evaders--adding several leading oil companies
to a list of tax delinquents that might be forced into bankruptcy court unless
they pay their arrears. The move was the latest in a series of desperate
measures the government is taking to boost tax collection and mend its thread
bare budget. The government hopes that by threatening major tax evaders with
bankruptcy, they will scare the country's errant tax payers into filling empty
coffers. Major companies targeted for bankruptcy can avoid insolvency
proceedings, if their accounts showed the government owes them an amounts equal
to their tax debts for fuel supplied to state organizations.
The most recent step in fighting tax
evaders was Russian presidential decree No 1428, (dated (October 11, 1996,
which created a Processional Emergency Commission (the Commission) on
strengthening fiscal discipline. The major principals and objectives are:
. Control over the timely and full payment
of taxes and customs and other compulsory payments; . The elaboration of
measures to secure a full-scale collection of taxes and other compulsory
payments; . Securing the legality and efficiency of the work of tax and
customs, as well as tax police agencies; . Control over the timely and
special-purpose use of the resources of the federal budget and state extra
budgetary funds. . Take decisions to carry out checks of the financial and
economic activity of legal entities and compliance by individuals and entities
with the tax, customs and banking legislation of the Russian Federation; .
Check the operations of tax and customs bodies;
. Organize check of the timely and
special-purpose use of the resources of the federal budget and state extra
budgetary funds.
In addition, the President granted broad
powers to the Commission to meet the objectives of the decree and secure its
accountability.
Monetary Policy
Interest
rates, much to the chagrin of reformers, in the past barely reacted to currency
stabilization and the ensuing drop in inflation. Little confidence existed in
the sustainability of reforms while inflation expectations remained high. In
1996, interest rates finally started to come down--albeit slowly. Real interest
rates, however, are still very high. As recently agreed by the Russian
government and the IMF, the ruble is due to become convertible by 1997. Better
access to the ruble market could thus lead to a rapid increase in international
interest in the currency. Nevertheless, the ruble is trying to join the club of
respectable currencies. Due to the establishment of a crawling peg, the
currency's downslide is almost under control. A generally more stable economic
environment and high interest rates could make the ruble more attractive. The
ruble's recent past has been eventful to say the least. Between January
1992--effectively the start of economic reform under Yeltsin--and March
1995,the currency depreciated by a massive 2,130 percent. In the second quarter
of 1995, an over-restrictive monetary policy led to a severe shortage of the
currency which then duly appreciated by 15 percent within three months. As
concerns rose that too rapid currency appreciation would further destabilize
the economy, the free-floating ruble program was abandoned and a 'ruble
corridor', which envisaged further depreciation but within predetermined
limits, was introduced. The ruble corridor program has proven to be quite
successful. The Central Bank, which has been intervening repeatedly in the
market, has managed to keep its foreign exchange reserves at a satisfactory
level, and the business community has been able to rely on a more predictable
exchange rate trend. In July 1996, the 'fixed' ruble corridor (the upper and
lower limits of which only had to be redefined every few months) was
transformed into a 'variable' ruble corridor, with the band shifting on a daily
basis. Under this program, monthly depreciation now stands at around 1.5 percent.
By the end of December 1996, the exchange rate against the dollar should have
reached Rb 5,700/US $.
Russia's monetary environment started
showing promising signs of stabilizing in 1996. During 1995, inflation reached
200 percent by December. 1996 is drawing to a close and the inflation rate
seems set to fall to 19 percent. The central bank has been pursuing a very
consistent policy lately, so its goal of maintaining monetary stability looks
credible. Moreover, low inflation is one of the conditions imposed by the IMF
in return for its monthly credit and it is therefore hardly in the government's
interest to start emission based means of financing the budget deficit. The
main risk for inflation could come from a high budget deficit due to low tax
revenues. Financing the deficit has become easier than in the past due to good
international credit ratings--for example, IBCA: BB+, Moody's: Ba2.--are making
it cheaper for Russia to borrow on the foreign capital markets.
A key element of Russia's macroeconomic stabilization
program has been a tight monetary policy to soak up excess rubles floating
around the Russian economy and fueling inflation. That policy's success is
among the factors that drove T-bill yields up by 26.6 percent Monday to an
annualized 121.4 percent on the secondary market. Just a month ago, yields
stood at 53.33 percent, according to Skate-to Press Consulting Agency.
The reason for the jump, analysts say, is
simple supply and demand - little ruble supply in the market at a time when
government spending demands revenue. The banks do not have the money to invest
in GKO (treasury bills) at 3 percent per month--but they will find the money to
invest for 10 percent per month. Russia's monetary expansion under the IMF
agreement is not to exceed 3 percent, compared with 9 percent in December.
Combined with promises by Yeltsin to repay wage arrears and ease the impact of
reforms on the social sphere, that tight policy has forced the government to
raise yields as a lure to banks to loan the government money.
Intergovernmental Finance
The
decentralization of the Russian Federation's intergovernmental financial
relationships began with a series of successive tax sharing arrangements along
with the regions expenditure responsibilities increasing. This sharing and
reassignment strategy continued up to and on through the adoption of a new
constitution in December 1993. In Russia, the tax formula sharing rates vary by
region and are often negotiated by each locality with the center. This makes
any assessment about the equity impact of transfers or their effects on local
revenue effort difficult. A general disadvantage of tax sharing is that it does
little to enhance local accountability or efficiency. Localities receive
revenue regardless of their tax effort and have no discretion to set the tax
rate or base. If they view these revenues as costless, their incentive to spend
efficiently is lessened. The result may be undue expansion of subnational
spending. In Russia shared taxes are retained by (or accrue to) the
jurisdiction in which they are collected. This differs from most market
industrial and developing economies where shared taxes (like the VAT in
Germany) may be shared through a formula based on factors such as population,
per capita income, urbanization or other factors. Derivation-based sharing as a
rule channels resources to high income areas where the tax base and, therefore,
revenue collections are largest. It is thus inherently counter-equalizing. This
may be a problem in countries where regional inequities are serious and where
the intergovernmental system lacks other instruments (such as transfers) to
address such imbalances.
The intergovernmental fiscal relations of
the Russian Federation continues to be highly opaque due to the bargain-based
system which presently is being utilized. The bargain-based system is making
accountability in fiscal policy even worse than is necessary--therefore further
reducing the transparency. The size and structure of the Russian Federation
contributes to the problems occurring in its fiscal relationships. It is made
up of 89 regions consisting of 29 republics, 50 oblasts, 6 krais, and 10
autonomous okrugs, plus 2 metropolitan cities (Moscow and St. Petersburg) which
are referred to as the 89 "subjects of the federation" in the
constitution. The regions are even further subdivided into more than 2000
districts, where all the local governments within a region report to the
regional governments and are subject to regional regulations, although each
local government has independent" (emphasis added) budgetary and
administrative status.
Effects of Decentralization
Economic
decentralization has led to the transfer of a number of services with major
benefit spillovers (education, health, and social welfare) to the regional and
local levels. While the administration of these programs by local governments
may be appropriate because they are closer to the people, the many small local
governments that have been created as a result of the strong political push for
decentralization cannot likely provide these services at an adequate level from
their own resources. In some regions, enterprises' "public" spending
exceeds budgetary social spending and, in a few "one-company towns"
there is no public spending by the budget at all on non-administrative
functions. Enterprises did not provide these services once privatized, and
responsibility fell onto regional and local governments to finance them. But
local governments will need revenue sources to finance the additional burden.
Decentralization, which led to ownership
assignment and financial responsibility, has caused the regions to become more
involved in the commercial sector through producer subsidies, capital
transfers, and privatization. It has also led to the budgetary expenditures by
the regional governments to increase from 13 percent of the GDP in 1992 to
around 18 percent in 1994. Recent policy changes have suggested that this trend
of more subnational spending is likely to continue.
The Federal government has approved
legislation which led to the previously discussed changes in expenditure
assignment and also gave local governments the power to formulate budgets and
raise revenues without worrying that their surpluses were going to be extracted
by the central government. These new assignments of expenditures are not
efficient, in part because the federal government has passed down" many of
the expenditure assignments which were formerly the responsibility of the
Soviet state. Revenue autonomy has not been reached partially due to the yearly
changes in tax sharing rates. Disparities between the rich and poor regions has
also contributed to a problem budgetary concern. Along with these disparities,
the high rate of inflation has significantly contributed to revenue
unpredictability of the rayons and oblasts. Revenue predictability and the
subnational area's economic state due is of the utmost importance when one is
considering expenditure assignment of the federation.
Social Welfare and Russia
The
significance and necessity of an efficient social safety net in the Russian
Federation can only be understood within the context of the Soviet experience
of social security and how today the ideological inclination toward a welfare
state is affecting Russian society. The state's pervasive role in Soviet
society affected both economic and social conditions. Economically, a
state-caused inverse relationship existed between GDP and the state's
commitment to social safety during the Brezhnev regime. Economic and political
stagnation characterized the latter years of the Brezhnev era. Economically,
GNP growth declined precipitously between 1961 and 1985 (see A1 and A2). Prior
to 1960, the USSR utilized extensive rather than intensive factors of
production--specifically labor, capital (stock), and natural resources. In
essence, Soviet authorities were able to take advantage of Imperial Russia's
lack of a strong industrial base by transferring much of the population from
agriculture to industrial production during Stalin rapid industrialization drive
of the 1930s and 1940s. The emphasis placed on heavy industry produced a
correspondingly high rate of consumer saving which allowed for increased
capital growth, that when combined with the natural resource abundance and
intensive use of existing capital helped sustain economic growth The USSR's
ability to sustain economic growth in the 1970s was fostered by its large
reserve of oil that helped finance imports of western technology.
The exhaustion of labor surplus, declining
birth rates, inefficient use of natural resources and other factors of
production, the growing expenditures needed to maintain military parity with
the United States, and the sudden drop in oil prices, and the mis-development
of the economy all were factors that contributed to the USSR's economic
stagnation in the late 1970s and early 1980s. While economic efficiency
decreased during the Brezhnev period, the USSR's leadership demonstrated
increased commitment to the Soviet version of the social safety net. The
party-state's pervasive role in society had the effect of slowing economic
growth through poor re-allocation of resources and the social effect of
retarding the development of a civic society. As a result, Soviet society
developed an enduring attachment to the idea of an omnipotent state which
provided for their basic needs regardless of the economic costs.
From a Western perspective, the Soviet
Union was ideologically a hyper" welfare state in the sense that prior to
the Gorbachev era, the state attempted to provide a high level of social
security for every citizen, often to the point of harming economic efficiency.
Additionally, it heavily restricted the development of private sector in order
to prevent wide wage disparity. As mentioned above, the CPSU's monopoly on
power extended to every aspect of society and in exchange for party dominance
the working population received implicit social guarantees in the form of a
social contract." Linda J. Cook succinctly identifies each sides' basic
commitments and responsibilities:
Basically, the regime provided broad
guarantees of full and secure employment, state controlled and heavily
subsidized prices for essential goods, fully socialized human services, and
egalitarian wage policies. In exchange for such comprehensive state provision of
economic and social security, Soviet workers consented to the party's extensive
and monopolistic power, accepted state domination of the economy, and compiled
with authoritarian political norms. Maintenance of labor peace in this
political system thus required relatively little use of overt coercion.
The weakening of the party and other
unintended consequences of glasnost and perestroika such as the emergence of
the Russian Republic, the decision to release Eastern Europe from Soviet
domination, and the attempt to make state owned enterprises more efficient all
had a direct impact on lowering the standard living for the USSR's population.
Gorbachev tried and failed to cut the guarantees of the social contract. In
contrast to earlier in the Soviet period, the perestroika reforms had the
effect of giving significance to money" in the sense that inputs had
developed value through the economic decisions which constituted perestroika.
From the center's perspective, the problems caused by the inability to cut expenditures
through revision of the social guarantees were compounded by revenue loss in
three key areas: vodka sales, turnover tax, and republic contribution to the
center--especially from the Russian Republic.
Gorbachev began perestroika with an attack
on worker efficiency. One measure adopted to combat this perceived evil was
restriction on the sale of alcohol. The consequence was a loss in revenue which
was further compounded by expenditures related to the Chernoybl disaster and
the massive Armernian earthquake in 1987. In 1990, the center granted state
owned enterprise (SOEs) greater leeway in the setting of prices--between 50
percent and 100 percent of state mandated prices. Since retail prices were
unaltered, the state lost a huge amount of revenue from the turnover tax. In
addition, Russia offered to lower the profit tax for those enterprises willing
to pledge" allegiance to the Russian Republic. Finally, the dissolution of
the Soviet Union was hastened by the rise of Russian nationalism and populism both
of which had economic implications. The Russian Republic provided 80 percent of
the revenue to the USSR's budget. Yeltsin, using his powerful position within
the Russian parliament, declared in October of 1989 that the Republic would
halt all payment to Union institutions. He followed this devastating maneuver
by nationalizing" the USSR Ministry of Finance and seizing its mints. In
October of that year, Russia seized her share of the USSR'S precious metals.
Faced with such tremendous loss of revenue which created a budget deficit that
equaled 10 percent of GNP, the Soviet government elected to increase the amount
of money in circulation without a corresponding increase in the production of
consumer goods and services. The decision to increase money circulation,
through wage increases, had a jarring effect on Soviet society. The first
impact, characterized by the indelible image of long bread lines and the
stereotype that a large profit could be made on a pair of Levis familiar to
many Westerner was the result of the disruption of goods and services to the
general population.
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