Slide 9

9 The primary moment in the organization of the system of interbudgetary relations is the question of the distribution of expenditure obligations between the levels of government. Economic theory practically does not give recommendations on the distribution of expenditure obligations. It is assumed that a particular public service should be provided by the level of government that most closely represents the community of people that benefits from the provision of this service. From this point of view, for example, it is justified to finance local goods from the municipal budget, and public services national importance - such as defense, security - from the central budget. However, the majority of public services do not fully fall into any of the listed categories and, therefore, it is not possible to decide on the distribution of obligations for their financing according to theoretical considerations only.

Slide 10

Components of an expense obligation:

10 legislative regulation; financing; administration. At the same time, regulation cannot be quantified, and financing and administration, although they can be quantified, do not reflect the full set of actions of the authority to fulfill the spending obligation.

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Approaches for assessing the expenditure needs of regional budgets.

11 Indirect assessment of spending needs of regions based on factor analysis. Assessment of expenditure needs of the regions based on existing targeted transfers. Application of a single norm of budget expenditures for all ATOs of the state. Estimation of expenditure needs of the regions based on actual expenditures.

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1. Indirect assessment of the spending needs of the regions based on factor analysis.

12 This method can be used in the presence (identification) of factors that determine the demand and / or cost of providing public services in the ATO (the number of consumers of certain types of public services, the cost of heating and lighting, transport and wages, etc.) .

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2. Estimation of expenditure needs of the regions based on existing targeted transfers.

13 A similar approach is used in case of insufficient statistical information to analyze the impact of various factors on the amount of expenditure, but at the same time, a certain number of targeted grants are allocated from the national budget. In this case, to calculate the transfer, the ratio of federal funds received in the region per capita and the average grant size for the country is determined, which is then used as one of the coefficients in the transfer distribution formula. This approach has several advantages, the most important of which is that, when applied, equalization transfers can supplement targeted transfers, and therefore there are no conflicts between ministries and departments responsible for the distribution of targeted and equalization transfers, and lower-level budgets are not deprived of targeted funding sources.

Slide 14

3. Application of a single norm of budget expenditures for all ATOs of the state.

14 To put this approach into practice, it is essential that there is no significant differentiation in the cost of providing public services between provinces.

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4. Estimation of expenditure needs of the regions based on actual expenditures.

15 Obviously, this approach is not feasible on a long-term basis, as regional authorities have the opportunity to influence the amount of spending in order to receive a larger transfer in the future. It should be borne in mind that the state always contains underdeveloped territories with low cost of public services due to: - inter-regional price differentiation, - inability to provide certain types of services due to lack of necessary infrastructure, - any other reasons related to the level of economic development.

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16 Revenues of territorial budgets include: 1) Own revenues of budgets - revenues fixed on a permanent basis in whole or in part 2) Regulatory revenues - these are federal and regional taxes and other payments for which deduction standards are set. Regulatory revenues are made to avoid vertical and horizontal imbalances.

Slide 17

Distribution of tax revenues between levels of government.

17 There are three options for securing tax revenues for local authorities: 1) all tax revenues coming from the territory under their jurisdiction are secured. At the same time, it is established that part of the income is transferred to the highest level of the budget system to meet the spending obligations of the national government. Due to the fact that this option may reduce the efficiency of inter-territorial income redistribution, as well as hinder fiscal stabilization, it does not represent the most effective method mobilize public resources and may create inadequate incentives for local governments to fund national spending commitments.

Slide 18

Options for fixing tax revenues (continued)

18 The second option involves assigning all taxes to the national government and then transferring funds to lower governments through grants or other transfers, as well as by setting standards for deductions of income for all or individual taxes to lower level budgets. The main disadvantage of such a system is the complete lack of connection between the level of government on whose territory certain taxes are collected and the level of spending decisions - the main prerequisite for creating effective system intergovernmental relations. Without the existence of such a link, there is a risk of fiscal illusion, i.e. the risk of overfunding local spending needs. On the other hand, the likelihood of frequent and unjustified reductions in the volume of financial resources transferred to the lower levels of the budget system may lead to the impossibility of creating a stable system for financing public services at the local and/or regional level.

Slide 19

19 3) Assignment of a certain part of tax powers to local or regional authorities, and, if necessary, compensation for missing revenues by fixing shares from regulatory taxes or by transferring transfers to ATO budgets. A key issue in the implementation of such a revenue distribution scheme is the choice of taxes assigned to local / regional authorities (local / regional taxes), as well as federal taxes, a certain share of the proceeds of which is credited to regional / local budgets (regulatory taxes). In the case of assigning tax powers to the lower levels of government, which makes it possible to link the amount of the tax burden and the spending decisions made, local authorities The authorities in their actions are guided by considerations of the "cost-benefit" type, which leads to an increase in economic efficiency.

Slide 20

Conclusion: options for transferring resources from one level of budgetary authority to another

20 1) revenue sharing 2) grant system. The division of income can be carried out in several ways: - division of the tax base - centralization of tax revenues and their subsequent distribution according to selected criteria.

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Options for transferring resources from one level of budgetary authority to another (continued)

21 Grants can be allocated in two ways: - in the form of non-targeted - targeted transfers. Each grant can, in turn, be allocated in a fixed amount or be subject to renewal, be conditional or unconditional, as well as be allocated on the terms of co-financing. The choice of a specific mechanism for allocating interbudgetary transfers depends on the objectives of economic and fiscal policy at a given time.

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The advantages and disadvantages of decentralization include

22 - the existence of a fiscal gap between the region's ability to generate revenues and its spending needs, arising from the advantages enjoyed by the central government in the field of tax collection and the relatively higher level of spending of the regions and settlements; - the need to reduce fiscal inequities arising from the difference in revenue generating ability that exists between different regions (especially those that are not dependent on regional policies) and their different spending needs; - the need to correct fiscal inefficiencies arising from differences in net fiscal benefits between regions; - the existence of positive externalities (due to the flow of funds from other administrative units) from various regional expenditures; - Ensuring a certain uniformity in the main types of regional spending programs.

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Regulatory revenues also include:

23 Transfers are funds received from federal and regional funds for financial support of regions, the amount of which is calculated according to the methodology established by the Government. Transfers to the population - budgetary funds for financing mandatory payments to the population: pensions, scholarships, allowances, compensations, other social payments established by law. Grant - funds provided to the budget of another level of the budget system on a gratuitous and irrevocable basis to cover current expenses. Subvention - funds provided to the budget of another level of the budget system or to a legal entity on a gratuitous and irrevocable basis for the implementation of targeted expenditures. Subsidy - budgetary funds transferred to the budget of another level, legal or natural persons, on the terms of shared financing of targeted expenses.

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Conclusion

24 regarding the distribution of interbudgetary transfers - a set of equalizing transfers is needed: from targeted (conditional) transfers for solving specific problems of economic policy, to other non-targeted (unconditional) transfers to equalize the vertical or horizontal imbalance of the budget system. At the same time, it is necessary to avoid, as far as possible, transfers aimed at simply covering the gap between ATO budget revenues and their expenditures in order to avoid discouraging fiscal efforts and reducing the responsibility of regional authorities for tax and spending policies.

Slide 25

Vertical imbalance occurs when differences in own income and expenditure obligations for various levels budget system.

25 However, simply covering the deficit of lower budgets should not be the goal of a transfer policy, as vertical imbalances can arise as a result of fiscal policy at the level of a subnational government: for example, as a result of decisions to increase spending or not to increase tax rates.

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Horizontal imbalance arises when there is a difference in the own fiscal potential of regional authorities at the same level of the budget system.

26 In practice, only a few countries use the methodology for assessing the fiscal potential of territories on a regular basis in order to calculate transfers (the most advanced in this direction: among federal states - Australia, Canada and Germany, among unitary states - Denmark and Great Britain).

Slide 27

Public policy in the field of interbudgetary transfers to equalize vertical and horizontal imbalances

27 Application of separate mechanisms for leveling vertical and horizontal imbalances. Equalizing the deficit of subnational budgets is carried out by dividing tax revenues and allocating transfers from the national budget, while equalizing the fiscal potential is carried out with the help of horizontal payments from regions with high budgetary security to low-income regions. A similar system applies in the Federal Republic of Germany.

Slide 28

State policy in the field of interbudgetary transfers to equalize vertical and horizontal imbalances (continued)

28 2) Integrated system equalization transfers. Both vertical and horizontal imbalances are leveled out with the help of a unified system of equalization transfers and special grants. A similar approach is used in the budget systems of Australia and Canada.

Slide 29

29 3) Leveling only the vertical imbalance of the budget system. Subnational budget deficits are leveled out by fixing regulatory taxes and equalization transfers, but no separate measures are taken to equalize horizontal imbalances. In this case, the migration of capital and work force arises as a result of the difference in income in the ATO, as well as the net fiscal benefit in the regions (net benefit from government spending and taxes paid). With this version of the budget policy, it is possible to allocate special grants, which, among other purposes, can have a horizontal equalizing effect. This approach is widespread in the US.

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Basic principles of interbudget. relations

30 1) The system of interbudgetary transfers should primarily pursue the goals of macroeconomic stabilization. 2) The method of distribution of equalization transfers should be approved in the context of the fiscal policy of the state (in the medium-term fiscal program of the government - for three years in advance). 3) The objectives of the allocation of equalization transfers should be clearly articulated, and there should be the possibility of their regular monitoring. 4) When planning transfers, it is necessary to take into account funds allocated through other channels. Due to the fact that, in addition to equalization transfers, funds are sent to the regions under the programs of various ministries and departments, the Ministry of Finance must take them into account when allocating transfers. 5) When allocating transfers, possible alternatives should be considered. In some cases, it is more efficient to finance the provision of public services not through lower level budgets, but through a direct payment to the service provider (especially if the national government wants to increase the diversification and efficiency of service delivery).

Slide 31

Possible options distribution of the Fund for Financial Support of the Regions according to the principles of income and cost-income equalization:

31 Income Equalization Techniques Income Equalization Techniques

slide 32

Income Equalization Techniques

32 Methods that equalize the incomes of regions in proportion to the deviation from a certain value (for example, from the average per capita income for all regions or their groups); methods that bring the income of the regions to a level not lower than the specified one; techniques that are combinations of techniques from the first two groups. At the same time, for each of the methods, an additional option can be distinguished: in addition to calculating transfers based on the unconditional equalization of average per capita incomes of regions, it is possible to carry out a calculation based on equalizing average per capita incomes, taking into account reducing coefficients that stimulate the efforts of regions to collect taxes. Income equalization is based on the provision of financial assistance only depending on the regional differentiation of average per capita income, adjusted using special coefficients (budget spending index). The purpose of introducing a correction factor is to take into account the inter-regional differentiation of the cost of providing public services (that is, it is a kind of "inter-regional deflator" of prices for the provision of public services).

Slide 33

Techniques of cost-income equalization

33 Expenditure-income equalization method based on ensuring a minimum level of regional deficit Expenditure-income equalization method based on the distribution of the FFSR in proportion to the gap between revenues and expenditures of regional budgets. FFSR distribution method combining the first and second options of cost-income equalization. These methods are based on the provision of financial assistance in accordance with the gap between income (income potential) and expenditure (expenditure needs) of the regions. Just as in the case of equalizing average per capita incomes, it is possible to distribute transfers that would provide a certain minimum level of regional deficit determined by the volume of the Fund, a simple distribution of FFSR funds in proportion to the gap between incomes and expenditures of regional budgets, as well as a combination of these two options.

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Canada:

34 Canada is a federal state. Canada is currently made up of 12 federal subjects: ten provinces and two territories. There are also about 5,000 municipalities in Canada, including cities, villages, townships, counties and special service areas.

Slide 35

35 The federal government has the authority to regulate issues of war and peace, defense, law and order, the national public debt and public property, the monetary and banking system, trade and commercial relations. The budget system of Canada corresponds to the federal system of public authorities - each level of government has its own budget. The revenue base of the federal budget consists of receipts from federal taxes, fees and other payments, and tax payments and intergovernmental transfers received from the federal budget are credited to provincial budget revenues.

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36 Each province was entitled to a share of federal tax revenues in its territory, the same for all provinces. Provinces also have the right to raise the federal tax rate on their territory in order to transfer additional tax revenues to their budgets. This procedure applies to income tax with individuals and corporations, tax on goods and services (analogous to value added tax). Taxes on natural resources and property taxes are credited to provincial budgets.

Slide 37

37 Provincial budgets are required to fund public education, health care, and municipal services. Both levels of the budget system have spending obligations in areas of common interest, such as, for example, agriculture and forestry. The federal government also bears the costs of social security.

Slide 38

Financial aid

38 is allocated in the form of targeted and non-targeted transfers. There are programs and financial assistance under the financial support plan - non-targeted transfers to equalize budget revenues

Slide 39

Calculation of equalization transfers

39 The formula is constructed in such a way that federal funds distributed among seven provinces - Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan. These subjects of the federation have income potential below the average level. Income potential is calculated as the difference between the average per capita revenue of each tax for the five provinces as a whole, approved as a federal standard, and the average per capita tax revenue for the province. Tax revenues are calculated at the average rates in force in all provinces. Tax potential is calculated on 33 positions, including direct and indirect taxes. website

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5.1. The concept and principles of interbudgetary relations

Interbudgetary relations is the relationship between the government Russian Federation, state authorities of the constituent entities of the Russian Federation and local governments regarding:

1) delimitation of expenses and incomes on an ongoing basis between the levels of the budget system;

2) distribution between the budgets of different levels of regulatory taxes according to time standards;

3) redistribution of funds from the budgets of one level to another, as well as between the budgets of the same level in different forms.

The purpose of interbudgetary relations is to create initial conditions for balancing budgets at each level, taking into account the tasks and functions assigned to them, while observing the minimum state social standards throughout the country, based on the tax potential available in the respective territories.

The nature of interbudgetary relations is based on budgetary federalism. Fiscal federalism is a system of principles for building interbudgetary relations, which allows, in the conditions of independence of each budget, to combine the interests of the Federation with the interests of each of its subjects and local governments.

Principles of interbudgetary relations:

1) independence of budgets of different levels. Independence of budgets in this case means:

• assigning to each level of power its own revenue sources and the right to independently determine the direction of spending budget funds within the framework of the current legislation;
• inadmissibility of withdrawal of additionally received incomes to higher budgets;
• compensation of expenses arising as a result of decisions taken by higher bodies of state power and administration, to budgets;

2) delimitation of expenditure obligations between public authorities and management at various levels;

3) compliance of the volume of expenditure obligations assigned to each level of state power and administration with revenue authorities;

4) the presence of a formalized mechanism for correcting the imbalance between spending obligations and revenue powers of each level of government;

5) availability special procedures prevention and resolution of conflicts between different levels of government and government.

5.2. Income powers and spending obligations

One of the factors that seriously hamper the growth of the effectiveness of interbudgetary relations is the continuing disproportion between the volume of budget expenditure commitments and revenue sources assigned to the subjects of the Federation.

In 1994, in accordance with the Decree of the President of the Russian Federation No. 2268, the mechanism of budgetary federalism is introduced new form redistribution of funds between federal budgets: the transfer of funds from the federal budget to regional budgets is carried out by forming the Fund for Financial Support of the Regions and calculating the amount of allocated funds based on a specially developed formula. This method has also been used in the relationship between regional and local budgets. Its use contributed to the objectification of the interbudgetary distribution of funds.

In the process of reforming interbudgetary relations, which has been going on for the past decade, 2005 became a landmark year, when for the first time the budget began to be formed on a fundamentally new basis - the legislative delineation of financial and budgetary powers between all levels of the budget vertical. However, the practice of budget execution in the past and current year shows that, unfortunately, in many regional and local budgets there are not enough funds to fulfill their spending powers. Thus, in 2005, this necessitated a significant increase in subsidies from the federal budget to support measures to ensure the balance of the budgets of the constituent entities of the Russian Federation (up to 52 billion rubles). In 2007, the volume of subsidies provided to the budgets of the subjects of the Russian Federation to support measures to ensure a balanced budget is proposed in the amount of 34.64 billion rubles, which is almost 39% higher than the level of 2006.

The problem of delimitation of revenue powers between the levels of the budget system, as a rule, is considered in the context of the following aspects:

• the level of government at which the decision to impose a tax is made;
• the level of the budgetary system in which the funds collected as a result of the introduction of the tax are received;
• the level of the budgetary system that performs administration.

Most of the functions of administering taxes, setting tax bases, tax rates or marginal tax rates are also entrusted to the central authorities.

Tax revenues should be distributed among the budgets of different levels in accordance with their spending obligations and the responsibility of the sub-federal authorities for their implementation.

The list of federal, regional and local taxes of the Russian Federation is established by the first part tax code RF. In the Russian Federation, the model of interaction between the levels of government in the field of delimitation of tax revenues is mainly practiced, based on the division of tax revenues between the levels of the budget system. This means that revenues from taxes introduced at any level of the budget system can also go to the budgets of other levels. For example, in 2003, 50% of the revenues from the excise tax on raw ethyl alcohol (which relates to federal taxes and fees) went to the federal budget, and 50% went to the budgets of the constituent entities of the Russian Federation. At the same time, 50% of the income from the land tax, which is local, went to the budgets of the constituent entities of the Russian Federation (with the exception of Moscow and St. Petersburg), and 50% went to the budgets of municipalities.

The model based on the division of tax revenues between the levels of the budget system is practiced not only in Russia, but also in a number of developed countries, among which Germany can be singled out. The main advantage of such a system of relationships between the levels of the budget system is the simplicity in regulating the proportions between the incomes of the federal and subfederal budgets in cases where the ratio between revenue authorities and expenditure obligations changes. However, being embodied in the Russian Federation, such a model led to a number of negative consequences. Firstly, regional authorities often treat their share of federal taxes as “foreign” money and do not manage it responsibly enough. Secondly, frequent changes in the proportions of tax sharing between the levels of the budget system lead to the disinterest of regional authorities in increasing their own tax base and to the inefficiency of developing long-term development programs.

The delimitation of expenditure obligations between the levels of the budget system should be based on the following principles:

• macroeconomic efficiency. This principle means the distribution of spending obligations, taking into account the effects of scale, localization and dilution. All spending that is redistributive in nature, within the framework of this criterion, should be transferred to the highest possible level. government controlled in order to prevent social conflicts;
• zone use criterion. It implies the maximum approximation of costs to consumers of the corresponding goods;
• the principle of uniformity of expenditures across the territory. Means the need to spend funds from the budgets of higher levels in the event of their even distribution throughout the country.

In accordance with these principles, expenditures between the levels of the budget system should be distributed as follows.

The legal basis for the division of powers, including expenditure, in Russia is the Constitution of the Russian Federation, the Budget Code of the Russian Federation, the federal law "On general principles organizations of local self-government in the Russian Federation”. The Constitution of the Russian Federation defines the subjects of the jurisdiction of the federal center, the subjects of joint jurisdiction of the Russian Federation and the subjects of the Russian Federation, as well as the subjects of the jurisdiction of the subjects of the Russian Federation, which have full state power outside the subjects of the jurisdiction of the Russian Federation and the joint jurisdiction of the Russian Federation and the subjects of the Russian Federation.

Interbudgetary relations became especially aggravated in 1996-1997, which was expressed in a large number of surrogate monetary and non-monetary forms of budget execution; the distribution of financial resources between the levels of the budget system vertically and horizontally acquired a subjective character, massive delays in financing wages, etc., acquired a social character.

The main problem characteristic of the Russian Federation in the field of expenditure powers was their unclear delimitation in the legislation and the attribution of a significant part of expenditures to the sphere of joint jurisdiction, which led to the blurring of responsibility between different levels of government and local self-government. The fuzzy delimitation of powers and the presence of a large amount of obligations imposed by higher levels of government on subfederal budgets, entails the lack of interest of regional authorities in pursuing their own economic policy aimed at economic and social development. Obligations imposed by higher levels of government on subfederal budgets that are not secured by funding sources are called unfunded federal mandates. An example of an unfunded federal mandate is the decision of the federal center to raise salaries for employees in the public sector, the responsibility for the implementation of which lies with the sub-federal authorities.

Claims for benefits and subsidies certain categories citizens are contained in more than 120 federal legislative acts. Federal laws charge local authorities with the obligation to pay 37 types of benefits from their budgets. The existence of unfunded federal mandates is a direct violation of the principle of matching the amount of spending obligations imposed on each level of government and administration with revenue powers.

In this regard, the Government of the Russian Federation has developed a concept for reforming interbudgetary relations. Its main task is to create a new mechanism for financial support of the constituent entities of the Russian Federation. In 1999, a new methodology for distributing transfers from the Fund for Financial Support of the Regions (FFSR) was adopted; The basis for calculating financial assistance to the constituent entities of the Russian Federation from the federal budget is the norms of financial costs for the provision of public services, the norms of the minimum budgetary security. In this regard, the Budget Code introduced such concepts as minimum state standards(public services, the provision of which to citizens on a gratuitous and irrevocable basis at the expense of financing from the budgets of all levels of the budget system of the Russian Federation and the budgets of state off-budget funds guaranteed by the state at a certain minimum level throughout the country) and minimum budget security (the minimum allowable cost of public or municipal services in monetary terms, which is provided by state authorities or local self-government per capita at the expense of the relevant budgets). To establish standards and determine the level of budgetary security, it is necessary to develop standards for financial costs for the provision of services and standards for minimum budgetary security. These standards are determined on the basis of a single methodology that takes into account the socio-economic, geographical, climatic and other features of the subject of the Federation that affect the level of these standards.

It should be noted that the formation of interbudgetary relations in 2007 proceeded taking into account the changes in tax and budget legislation that came into effect on January 1, 2007. The main ones include:

• transfer to the budgets of the constituent entities of the Russian Federation of the federal part of the mineral extraction tax in respect of mined natural diamonds and one-time payments for the use of subsoil (bonuses) for deposits of natural diamonds.

5.3. Intergovernmental transfers

The section "Interbudgetary transfers" accounts for more than a third of all federal budget expenditures for 2007 - 33.7%. The total expenditures under this section in the draft budget amount to 777.2 billion rubles, which is 46.8% more than in the 2006 budget.

In recent years, the volume of redistribution has increased significantly. If in 1999 gratuitous transfers to the regions amounted to 9% of federal budget expenditures, then in 2001 it was more than 18%, and in 2005 it was about a third. However, it should be borne in mind that such a significant share of funds redistributed through the federal budget between different levels of the budget system is largely due to the fact that in recent years this section has included many items of expenditure that previously went through other sections of the federal budget.

In addition, the budget, starting from 2005, is based on a new system of delimitation of spending powers. At the same time, a significant part of the powers assigned to the federal center has been delegated to the regional level and financed from the federal budget, which are also included in the “interbudgetary transfers”.

The main type of financial assistance to the budgets of other levels is Regional Financial Support Fund (FFSR), established in 1994. Until 2001, the FFSR accounted for up to 70% of all expenditures for providing financial assistance to regional budgets, now it is about 43%. The decrease in the amounts distributed to the regions through this fund is due to the creation and consolidation of a number of other funds for subsidizing the regions. The total volume of the FFSR is planned in the draft budget for 2007 in the amount of 260.42 billion rubles, which is 14% more than approved in the law on the budget for 2006.

The main goal of this Fund is to equalize the budgetary security of the constituent entities of the Russian Federation. The FFSR allocates grants to the constituent entities of the Russian Federation to equalize the level of budgetary security, subsidies for state financial support for the purchase and delivery of oil, oil products, fuel and food products to the Far North and equivalent areas, subventions for compensating electricity tariffs for the territories of the Far East and the Arkhangelsk region .

The methodology for calculating the amount of FFSR subsidies is based on the indicator of the level of estimated budgetary security of the region, which depends on the tax potential and expenditure needs of the region relative to the Russian average indicators calculated using special methods. In 2007, changes were made to this methodology for calculating the tax potential index, aimed at ensuring that for regions that have achieved higher rates of socio-economic development and were able to increase their tax potential above the average Russian level, the volume of federal subsidies did not decrease. This, as expected, will achieve the goal of stimulating the regions to develop their own tax base.

Another instrument of interbudgetary regulation is Federal Regional Development Fund (FFRD). Fund resources are used to equalize the provision of regions with engineering and social infrastructure, to finance federal programs for the development of regions.

Next year, funds will be allocated to the regions in the form of subsidies to co-finance the development of public infrastructure of regional and municipal significance. In addition, in connection with the ongoing reform of local self-government, the regions may receive additional federal funds for the creation and support of regional funds for municipal development.

The criterion for receiving funds from the FFRR is formalized principles, taking into account the level of co-financing of expenses, determined on the basis of the budgetary provision of the regions with the right of the constituent entities of the Russian Federation to independently determine specific areas for the use of funds. If, after the distribution of subsidies from the Financial Support Fund, the regional indicator of provision with public infrastructure does not exceed the average Russian level by more than 10% or below this level, then the subject of the Federation will receive subsidies from the Regional Development Fund. Moreover, only recipients can receive assistance through this fund. Donor regions, even if the level of development of public infrastructure in them does not meet the average Russian standards, do not receive subsidies from the FFRD. Thus, in 2007, 69 regions will receive subsidies from this fund (versus 55 in 2006).

An important tool for supporting regional budgets is Federal fund for co-financing of social expenses. The volume of the Fund for 2007 will be about 33.5 billion rubles, which is 27.8% higher than the level of the current year. The main goal of the Co-financing Fund is to support the budgets of the constituent entities of the Federation in the form of partial reimbursement of the regions' expenses for solving priority, socially significant tasks. Subsidies from this fund are distributed among all constituent entities of the Russian Federation for shared financing (partial reimbursement) of priority socially significant expenses (primarily for education, healthcare, culture, social security, social assistance population).

Thus, in 2007, 8.24 billion rubles were allocated for the provision of subsidies to low-income citizens for paying for housing and communal services. At the same time, the level of co-financing of these expenses from the federal budget will be 15% of the expected spending obligations of the subjects of the Russian Federation. It is also planned to allocate funds for the implementation of measures social support rehabilitated persons and persons affected by political repressions, home front workers, citizens with children, labor veterans.

A significant part of intergovernmental transfers is Federal Compensation Fund (FFK), the volume of which in 2007 will amount to a significant amount - about 153.9 billion rubles, which is more than 2 times the size of the Fund in 2006.

The funds of this fund are allocated in the form of targeted subventions to finance certain powers that are federal, but are delegated for execution to the regional level of government. Funds from this fund are transferred to all subjects of the Federation without exception, regardless of their level of budgetary security, in proportion to the number of relevant categories of the population. For each of the powers, funds are allocated in a separate line, and in Lately the list of these powers in connection with the ongoing reform changes regularly. A number of other items of expenditure under the Compensation Fund, related to the support of a number of regions and municipalities, have been financed for more than a year.

Thus, within the framework of this fund, in the current 2006 budget, subventions were allocated for the first time for the implementation of powers in the field of regulation of water relations, protection and use of wildlife objects classified as objects of hunting, management and use of forests. The same areas of funding remain in the draft budget for 2007.

In 2007, compensations appeared in the composition of this fund to increase the monetary allowance of employees and the wages of employees of the territorial divisions of the fire service, as well as employees of the territorial divisions of the public security police, maintained at the expense of the budgets of the constituent entities of the Russian Federation and local budgets: respectively 6.9 and RUB 8.2 billion This will contribute to the equalization of monetary allowances and wages in these organizations at the federal and territorial levels.

The main task Federal Fund for Reforming Regional and Municipal Finances is to encourage the regions that work most efficiently with their finances, with their budget. The draft budget for 2007 provides for the selection of 10 constituent entities of the Russian Federation and municipalities for granting subsidies based on the results of an evaluation of programs to reform regional and municipal finances. Regional Finance Reform Fund is formed at the expense of a loan from the International Bank for Reconstruction and Development (IBRD).

Except special funds, having a certain focus, in the section "Interbudget transfers" a separate line highlights various kinds of grants and subventions provided to the constituent entities of the Russian Federation to finance socially significant expenses, as well as to implement national projects.

Directly related to the interbudgetary sphere are also federal budget expenditures provided for the implementation of Federal targeted investment program, which includes funding for Federal Target Programs (FTPs), some of which are directly related to the regions. In the 2007 budget, funding for a number of FTPs for the development of regions ends. At the same time, next year the list of FTPs includes two new regional programs with significant federal funding: "Development of Sochi as a mountain climatic resort for 2006-2014." and "Socio-economic development of the Kuril Islands for 2007-2015". In addition, the 2007 budget will double (from 6 to almost 12 billion rubles) funding from the federal budget for the program “Restoring the Economic and social sphere Chechen Republic for 2002 and subsequent years.

5.4. Problems of interbudgetary relations

The problems of relations between the federal center and the regions remain one of the most acute and complex in the process of developing and adopting the budget for the next financial year. The relevance of these problems is also evidenced by the fact that during the preparation of the 2007 budget, a meeting of the Presidium of the State Council "On the improvement of interbudgetary relations in the Russian Federation" was held. And in July, for the meeting of the State Council, a Report was presented on the interaction of federal and regional authorities in the development of programs for the socio-economic development of the regions.

The Budget Message of the President of the Russian Federation "On Budget Policy in 2007" formulated the main objectives for improving interbudgetary relations. The key direction is a cardinal increase in the efficiency of management of state and municipal finances. At the same time, it was noted that it is necessary to “reduce dependency in the regions” and strengthen the motivation of the regions to develop their own tax base.

In fact, similar proposals are contained in the already mentioned Report of the State Council and government documents relating to interbudgetary relations. First of all, these are the “Concept for Improving the Efficiency of Interbudgetary Relations and the Quality of Management of State and Municipal Finances in the Russian Federation in 2006-2008” adopted by the Government, as well as the main indicators of the long-term financial plan for 2007-2009 In addition, the amendments to the Budget Code prepared by the Ministry of Finance are aimed at implementing the same tasks.

It should also be noted that the formation of interbudgetary relations in 2007 proceeded taking into account the changes in tax and budget legislation that came into effect on January 1, 2007. The main ones include:

• transition from permissive to declarative procedure for VAT refunds to exporters;
• reduction of the tax base for corporate income tax by the amount of losses incurred by them in previous years; reducing the time for writing off R&D expenses for corporate income tax;
• establishment of a reduction factor to the tax rate for the mineral extraction tax (MET), stimulating the further development of oil fields that are at the final stage of development (with a depletion of more than 80%) and a zero MET tax rate for new oil fields;
• increase in social tax deductions for personal income tax for education and treatment;
• change in excise rates for excisable goods (products);
• transfer to the budgets of the constituent entities of the Russian Federation of the federal part of the mineral extraction tax in respect of mined natural diamonds and one-time payments for the use of subsoil (bonuses) for deposits of natural diamonds.

According to the Ministry of Finance, the envisaged changes in the fiscal legislation will lead to a reduction in revenues of the budget system by 193.5 billion rubles, of which 23.8 billion rubles. falls on the consolidated budgets of the constituent entities of the Russian Federation.

A distinctive feature of interbudgetary regulation in 2007 should be the introduction of mechanisms aimed at strengthening the motivation of regions to increase their tax potential and increase their independence in the use of investment funds to solve development problems. To this end, the methodology for distributing subsidies from the Federal Fund for Financial Support of the Subjects of the Russian Federation and the procedure for providing investment support to the regions were adjusted.

One of the main criteria by which one can ultimately judge the effectiveness of the policy in the field of interbudgetary relations is the convergence of the level of socio-economic development and the level of basic social services provided by the state to its citizens throughout the country. At present, as is known, the degree of differentiation in all the most important economic and social parameters of indicators between the regions of Russia is very high. Thus, per capita budget expenditures vary significantly in different regions: for health care by more than 6 times, for social security by 15 times, for education by more than 5 times. Therefore, the task of equalizing the level of budgetary security and, in a broader sense, the levels of socio-economic development, remains one of the main priorities of interbudgetary regulation.

At the same time, as follows from the Explanatory Note to the Draft Budget, in 2007 the Ministry of Finance forecasts stable execution of the budgets of the subjects of the Russian Federation. At the same time, the analysis of the materials submitted to the draft budget shows that the situation with the execution of the budgets of the constituent entities of the Federation varies significantly by region. In addition, a register of current spending obligations by levels of the budget system has not been formed to date, state social standards, the standards of financial costs for the provision of state and municipal services are not defined.

Questions for self-examination

1. What is intergovernmental relations?
2. What are the principles of building interbudgetary relations in a federal state?
3. What are income powers and what are the forms of their manifestation?
4. What are spending obligations and what are the forms of their manifestation?
5. Appointment of financial assistance funds.
6. Purpose, source of formation and direction of use of the fund for financial support of the regions.
7. Purpose, source of formation and direction of use of the compensation fund.
8. Purpose, source of formation and direction of use of the social spending co-financing fund.
9. Purpose, source of formation and direction of use of the regional development fund.
10. Purpose, source of formation and direction of use of the fund for the reform of regional finance.

Workshops

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Workshop 5. Interbudgetary relations

Presentations

Title of the presentation	annotation

Tutors

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Topic 5. Interbudgetary relations

Objective redistribution of funds between budgets to equalize the level of budgetary security of regions and municipalities Legislative delimitation of spending powers and revenue sources between budgets of all levels Balance of interests of all participants in interbudgetary relations Independence of budgets of all levels Basic principles of interbudgetary relations under budgetary federalism Equality of all budgets of the Russian Federation Unity of the budgetary system

Some terms and definitions Interbudgetary relations are relations between state authorities of the Russian Federation, state authorities of the constituent entities of the Russian Federation and local governments. "Donor" - a subject of the Russian Federation, a municipality, for which the amount of tax payments transferred to the budget system of the Russian Federation exceeds the amount of budget expenditures. "Recipient" - a subject of the Russian Federation, a municipality, for which the amount of budget expenditures exceeds which the amount of tax payments transferred to the budget system of the Russian Federation. Fund for financial support of constituent entities of the Russian Federation (municipalities) - funds generated in the federal budget (budget of a constituent entity of the Russian Federation) to provide financial assistance to constituent entities of the Russian Federation (municipalities) and distributed in accordance with a fixed formula. The budget system of the Russian Federation is based on economic relations and state structure of the Russian Federation, the totality of the federal budget, the budgets of the constituent entities of the Russian Federation, local budgets and the budgets of state extra-budgetary funds regulated by the rules of law. Transfers - transfer of funds to the budgets of the lower territorial level from the Regional Support Fund

Budget equalization vertical The process of achieving a balance between the amount of spending commitments of each level of government with the potential of its revenue resources (tax revenues). The principle of vertical balance makes demands both on the higher level of government (budget) and on regional and local authorities (budgets). In the event that the potential for providing the revenue side at the lower level is insufficient to finance the provision of services (performance of functions) for which one or another regional or local body is responsible, then the central government is obliged to provide this lower level of government with the missing budgetary resources. Vertical alignment does not solve all budgetary balancing problems. It should be combined with the process of horizontal balancing of budgets.

Horizontal budget equalization Proportional distribution of taxes between the subjects of the Federation (regions) according to a certain formula to eliminate (or reduce) inequality in tax opportunities (potentials) of different territories (subjects of the Federation and Municipalities). In the conditions of the Russian Federation, the task of horizontal alignment is more difficult than in any other country. Solving the problem of providing everyone with state-guaranteed services and benefits is associated with large differences in the economic situation of certain regions, with different levels of costs and a large differentiation in the budgetary capabilities of regional and local authorities, differentiation of the population in terms of the level of cash income received; regional differences in living wage associated with the price level of regional consumer markets. In accordance with the concept of reforming interbudgetary relations in Russia, a transition is being made from individual and constantly changing standards to financial transfers based on a methodology for calculating them that is uniform for all regions.

In the field of the mechanisms used to smooth out horizontal financial imbalances and the system of financial equalization In the field of the mechanisms used to smooth out horizontal financial imbalances and the system of financial equalization, the dominance of the federal principle is manifested in: the preservation of financial flows 1) in the preservation of significant redistributive financial flows that close on the federal budget; construction of a system of transfers 2) in the construction of a system of transfers, in which at the federal level itemized accounting is carried out not only for the income of the budgets of the subjects of the federation, but also for their expenditures; hidden redistribution of income 3) in hidden redistribution through the system of transfers of income from own and fixed sources of budgets of a lower level.

Financing of certain targeted expenditures Equalizing the level of minimum budgetary security of the “lower level” budgets Covering temporary cash gaps that arise during the execution of budgets Forms of financial assistance to budgets of other levels Shared financing of investment programs and projects for the development of public infrastructure SubventionsGrantsSubsidiesBudget loans PURPOSE:

1) Determination of the actual per capita income 2) Calculation of the index of budget expenditures 3) Calculation of the reduced per capita budget income 4) Calculation of transfers and shares of the subjects of the Russian Federation (MO) in the FFF Algorithm for calculating transfers from the FFP for the constituent entities of the Russian Federation and the Moscow region deductions from regulatory sources Population of a constituent entity of the Russian Federation (MO) Justified (normative) budgetary need of a constituent entity of the Russian Federation (MO) Average (minimum) justified need for constituent entities of the Russian Federation (MO) Actual per capita income Index of budget expenditures

4.1) Search for a subject of the Russian Federation (MO) with min reduced per capita budget income and a subject of the Russian Federation (MO) following it by this indicator followed by the subject of the Russian Federation (MO) 4.3) Multiplying the amount received by the IBR (for the first subject of the Russian Federation (MO)) and by the number of this subject of the Russian Federation (MO) 4.4) The resulting value is subtracted from the projected volume of the FFSR 4.5) Equalizing the budgetary security of the subjects of the Russian Federation (MO ) according to a similar principle until the volume of the FFSR becomes equal to zero 4.6) Calculation of the shares of the subjects of the Russian Federation (MO) in the FFRR Bring the indicator of the reduced per capita budget income in the subjects of the Russian Federation (MO) to the maximum possible with the projected volume of the FFSR. TARGET:

Types of financial assistance funds Federal Fund for Financial Support of the Subjects of the Russian Federation Federal Fund for Co-financing Social Expenditures Fund for Reforming Regional and Municipal Finances Federal Fund for Regional Development Federal Compensation Fund The formation budget for the funds listed below is federal Funding purposes: Equalization of the budgetary security of the constituent entities of the Russian Federation Partial reimbursement of expenses budgets of subjects of the Russian Federation for the implementation of social measures. support for labor veterans and home front workers; payment of state allowances for citizens with children; providing social support for rehabilitated persons and persons recognized as victims of polit. repression. Providing subsidies to the subjects of the Russian Federation and the Moscow Region, selected on a competitive basis, in two installments within 2 years based on the results of the implementation of the stages of implementation of the programs for reforming regional and municipal finances. Increasing the level of socio-economic development of the constituent entities of the Russian Federation Providing subventions for the fulfillment of expenditure obligations of the constituent entities of the Russian Federation and (or) municipalities, the financial provision of which is carried out at the expense of subventions from the federal budget.

FINANCIAL ASSISTANCE TO LOCAL BUDGETS Grants from the regional fund for financial support of settlements (Art. 137 BC) Grants from regional funds for financial support of municipal districts (urban districts) (Art. 138 BC) Other grants and subsidies to local budgets (Art. 139 BC) SUBVENTIONS FROM THE REGIONAL COMPENSATION FUND OTHER FREE AND NON-REFUNDABLE TRANSFERS BUDGET LOANS TO LOCAL BUDGETS From the budget of a constituent entity of the Russian Federation (Article 135 BC) From the budget of a constituent entity of the Russian Federation (Article 135 BC)

From local budgets (Art. 142 BC)) FINANCIAL AID FROM BUDGET OF MUNICIPAL REGIONS TO BUDGET OF SETTLEMENTS (Art. 142_1 BC)) SUBVENTIONS TO REGIONAL FINANCIAL SUPPORT FUNDS (“Negative transfers”) (Art. SETTLEMENT BUDGET TO BUDGET OF MUNICIPAL REGIONS (Inter-municipal functions) (Art. 142_3 BC) FUNDS TRANSFERRED TO THE FEDERAL BUDGET OR TO THE BUDGET OF A SUBJECT OF THE FEDERATION IN CONNECTION WITH REPAYMENT OF DEBT OTHER FREE AND NON-REFUNDABLE TRANSFERS

80 percent of the tax revenues of the budgets of the constituent entities of the Russian Federation are generated by deductions from federal taxes Deviation from the basic principles of budgetary federalism Imperfect methods of the Ministry of Finance for calculating the tax potential Part of the financial assistance is distributed without clear criteria and procedures Privileged position of a number of national republics The principle of equality in the system of interbudgetary relations The optimal distribution of resources between the levels of the budget system has not been achieved Imperfection of the Budget Code of the Russian Federation Problems of interbudgetary relations

"Reefs" of interbudgetary relations: 1) 1) Acute vertical imbalance of the budget system. 2) Smoothing out the horizontal imbalance and creating an equalization payment scheme. 3) The current model of transfers, despite its constant improvement, does not yet meet the requirements for the effective development of the country's economy as a truly federal state. 4) The practice of transfers from the federal budget to the budgets of the subjects of the Russian Federation not only did not lead to an equalization of the level of socio-economic development of the regions, but also exacerbated their differences. 5) Dependence of the regions on federal budget assistance is growing. 6) Redistribution in favor of unprofitable, wasteful spending regions at the expense of more economical and efficient neighbors and, as a result, it is not possible to direct transfers to regions with an objectively low provision of social infrastructure, if based on data on regional expenditures and incomes in their distribution

The Ministry of Finance proposes to complicate the gradation of regions: Instead of: Subjects of the Russian Federation Donors Recipients Alternative - division into groups: (depending on subsidies) Subjects of the Russian Federation About 20 subjects receiving financial assistance at a level not exceeding 20% ​​of their own income 57 subjects receiving financial assistance level from 20% to 60% of budget revenues The remaining subjects of the Russian Federation, financial support in the total amount of revenues of which exceeds 60%

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Interbudgetary relations

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Interbudgetary relations are relations between state authorities of the Russian Federation, state authorities of the constituent entities of the Russian Federation and local governments related to the formation and execution of the relevant budgets.

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The modern system of interbudgetary financial flows began to take shape in the Russian Federation starting from 1991. By this time, before the formation of an independent Russian state, the budgetary system of the RSFSR was part of the centralized budgetary system of the Soviet Union. Due to the absence of any uniform norms for fixing revenue sources and spending powers, for each ATU there were individual proportions for the distribution of tax and non-tax revenues, through which pre-agreed expenses were financed.

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History (continued)

The new Constitution of 1993 and the strengthening of the positions of the federal authorities made it possible to carry out a reform of interbudgetary relations in 1994, the main purpose of which was to formalize the distribution of revenues between the federal and regional budgets and the provision of financial assistance to budgets of a lower level

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As a result of the reforms carried out, the system of federal financial support for the regions now includes several channels for providing financial resources, which can be divided into two groups: - regular and - irregular types of financial assistance. As part of regular financial assistance, it is necessary to single out, first of all, transfers from the Federal Fund for Financial Support of the Regions, subsidies to the budgets of closed ATOs, and subventions to Moscow. Irregular financial assistance mainly includes expenditures under the implementation of various federal programs, as well as funding from ministries and departments.

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The main channel of regularly provided federal financial assistance to the regions is the Regional Financial Support Fund, which, since 1994, has been formed and distributed in accordance with the following principles. The value of the FFSR is approved in the form of a fixed share of tax revenues of the federal budget (in 1994 - 22% of VAT revenues, in 1995 - 27% of VAT revenues to the federal budget, in 1996-97 - 15% of tax revenues of the federal budget for except for import duties...). Every year 70-80 subjects of the Federation out of 88 have the right to receive transfers from the FFSR.

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The task of interbudgetary relations

Allocate expenses Allocate revenues according to the appropriate budget

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Classification of interbudgetary relations

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The primary moment in the organization of the system of interbudgetary relations is the question of the distribution of expenditure obligations between the levels of government. Economic theory practically does not give recommendations on the distribution of expenditure obligations. It is assumed that a particular public service should be provided by the level of government that most closely represents the community of people that benefits from the provision of this service. From this point of view, for example, it is justified to finance local goods from the municipal budget, and state services of national importance - such as defense, security - from the central budget. However, the majority of public services do not fully fall into any of the listed categories and, therefore, it is not possible to decide on the distribution of obligations for their financing according to theoretical considerations only.

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Components of an expense obligation:

legislative regulation; financing; administration. At the same time, regulation cannot be quantified, and financing and administration, although they can be quantified, do not reflect the full set of actions of the authority to fulfill the spending obligation.

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Approaches for assessing the expenditure needs of regional budgets.

Indirect assessment of the spending needs of the regions based on factor analysis. Assessment of expenditure needs of the regions based on existing targeted transfers. Application of a single norm of budget expenditures for all ATOs of the state. Estimation of expenditure needs of the regions based on actual expenditures.

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1. Indirect assessment of the spending needs of the regions based on factor analysis.

This method can be used if there are (identifying) factors that determine the demand and / or cost of providing public services in the ATO (the number of consumers of certain types of public services, the cost of heating and lighting, transport and wages, etc.).

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2. Estimation of expenditure needs of the regions based on existing targeted transfers.

A similar approach is used in case of insufficient statistical information to analyze the influence of various factors on the amount of expenditure, but at the same time, a certain number of targeted grants are allocated from the national budget. In this case, to calculate the transfer, the ratio of federal funds received in the region per capita and the average grant size for the country is determined, which is then used as one of the coefficients in the transfer distribution formula. This approach has several advantages, the most important of which is that, when applied, equalization transfers can supplement targeted transfers, and therefore there are no conflicts between ministries and departments responsible for the distribution of targeted and equalization transfers, and lower-level budgets are not deprived of targeted funding sources.

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3. Application of a single norm of budget expenditures for all ATOs of the state.

To implement this approach in practice, it is necessary that between the provinces there is no significant differentiation in the cost of providing public services.

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4. Estimation of expenditure needs of the regions based on actual expenditures.

It is obvious that such an approach is not possible to use on a long-term basis, because regional authorities have the opportunity to influence the amount of spending in order to receive a larger transfer in the future. It should be borne in mind that the state always contains underdeveloped territories with low cost of public services due to: - inter-regional price differentiation, - inability to provide certain types of services due to lack of necessary infrastructure, - any other reasons related to the level of economic development.

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Revenues of territorial budgets include: 1) Own revenues of budgets - revenues fixed on a permanent basis in whole or in part 2) Regulatory revenues - these are federal and regional taxes and other payments for which deduction standards are set. Regulatory revenues are made to avoid vertical and horizontal imbalances.

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Distribution of tax revenues between levels of government.

There are three options for fixing tax revenues for local authorities: 1) all tax revenues coming from the territory under their jurisdiction are fixed. At the same time, it is established that part of the income is transferred to the highest level of the budget system to meet the spending obligations of the national government. Because this option may reduce the efficiency of inter-territorial income redistribution as well as hinder fiscal stabilization, it is not the most efficient method of mobilizing public resources and may create inadequate incentives for local governments to fund national spending commitments.

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Options for fixing tax revenues (continued)

The second option implies assigning all taxes to the national government and the subsequent transfer of funds to lower government bodies through grants or other transfers, as well as by setting standards for deductions of income from all or individual taxes to the budgets of a lower level. The main disadvantage of such a system is the complete lack of connection between the level of government on whose territory certain taxes are collected and the level of spending decisions - the main prerequisite for creating an effective system of interbudgetary relations. Without the existence of such a link, there is a risk of fiscal illusion, i.e. the risk of overfunding local spending needs. On the other hand, the likelihood of frequent and unjustified reductions in the volume of financial resources transferred to the lower levels of the budget system may lead to the impossibility of creating a stable system for financing public services at the local and/or regional level.

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3) Assignment of a certain part of tax powers to local or regional authorities, and, if necessary, compensation for missing revenues by fixing shares from regulatory taxes or by transferring transfers to ATO budgets. A key issue in the implementation of such a revenue distribution scheme is the choice of taxes assigned to local / regional authorities (local / regional taxes), as well as federal taxes, a certain share of the proceeds of which is credited to regional / local budgets (regulatory taxes). In the case of assigning tax powers to the lower levels of government, which makes it possible to link the amount of the tax burden and the spending decisions made, local authorities in their actions are guided by considerations of the "cost-benefit" type, which leads to an increase in economic efficiency.

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Conclusion: options for transferring resources from one level of budgetary authority to another

1) revenue sharing 2) grant system. The division of income can be carried out in several ways: - division of the tax base - centralization of tax revenues and their subsequent distribution according to selected criteria.

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Options for transferring resources from one level of budgetary authority to another (continued)

Grants can be allocated in two ways: - in the form of non-targeted - targeted transfers. Each grant can, in turn, be allocated in a fixed amount or be subject to renewal, be conditional or unconditional, as well as be allocated on the terms of co-financing. The choice of a specific mechanism for allocating interbudgetary transfers depends on the objectives of economic and fiscal policy at a given time.

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The advantages and disadvantages of decentralization include

The existence of a fiscal gap between the region's ability to generate revenues and its spending needs, arising from the advantages enjoyed by the central government in tax collection and the relatively higher level of spending by regions and localities; - the need to reduce fiscal inequities arising from the difference in revenue generating ability that exists between different regions (especially those that are not dependent on regional policies) and their different spending needs; - the need to correct fiscal inefficiencies arising from differences in net fiscal benefits between regions; - the existence of positive externalities (due to the flow of funds from other administrative units) from various regional expenditures; - Ensuring a certain uniformity in the main types of regional spending programs.

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Regulatory revenues also include:

Transfers are funds received from federal and regional funds for the financial support of regions, the amount of which is calculated according to the methodology established by the Government. Transfers to the population - budgetary funds for financing mandatory payments to the population: pensions, scholarships, allowances, compensations, other social payments established by law. Grant - funds provided to the budget of another level of the budget system on a gratuitous and irrevocable basis to cover current expenses. Subvention - funds provided to the budget of another level of the budget system or to a legal entity on a gratuitous and irrevocable basis for targeted spending. Subsidy - budgetary funds transferred to the budget of another level, legal or natural persons, on the terms of shared financing of targeted expenses.

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regarding the distribution of interbudgetary transfers, a set of equalizing transfers is needed: from targeted (conditional) transfers to solve specific problems of economic policy, to other non-targeted (unconditional) transfers to equalize vertical or horizontal imbalances in the budget system. At the same time, it is necessary to avoid, as far as possible, transfers aimed at simply covering the gap between ATO budget revenues and their expenditures in order to avoid discouraging fiscal efforts and reducing the responsibility of regional authorities for tax and spending policies.

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Vertical imbalance occurs in the case of differences in own income and expenditure obligations at different levels of the budget system.

However, simply covering the deficit of lower budgets should not be the goal of the policy of allocating transfers, since vertical imbalances can arise as a result of fiscal policy at the level of a subnational government: for example, as a result of decisions to increase spending or not to increase tax rates.

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Horizontal imbalance arises when there is a difference in the own fiscal potential of regional authorities at the same level of the budget system.

In practice, only a few countries use the methodology for assessing the fiscal potential of territories on a regular basis in order to calculate transfers (the most advanced in this direction: among federal states - Australia, Canada and Germany, among unitary states - Denmark and Great Britain).

Slide 27

State policy in the field of interbudgetary transfers to equalize vertical and horizontal imbalances

Application of separate mechanisms for leveling vertical and horizontal imbalances. Equalizing the deficit of subnational budgets is carried out by dividing tax revenues and allocating transfers from the national budget, while equalizing the fiscal potential is carried out with the help of horizontal payments from regions with high budgetary security to low-income regions. A similar system applies in the Federal Republic of Germany.

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State policy in the field of interbudgetary transfers to equalize vertical and horizontal imbalances (continued)

2) A comprehensive system of equalization transfers. Both vertical and horizontal imbalances are leveled out with the help of a unified system of equalization transfers and special grants. A similar approach is used in the budget systems of Australia and Canada.

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3) Leveling only the vertical imbalance of the budget system. Subnational budget deficits are leveled out by fixing regulatory taxes and equalization transfers, but no separate measures are taken to equalize horizontal imbalances. In this case, the migration of capital and labor occurs as a result of the difference in income in the ATO, as well as the net fiscal benefit in the regions (net benefit from government spending and taxes paid). With this version of the budget policy, it is possible to allocate special grants, which, among other purposes, can have a horizontal equalizing effect. This approach is widespread in the US.

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Basic principles of interbudget. relations

1) The system of interbudgetary transfers should primarily pursue the goals of macroeconomic stabilization. 2) The method of distribution of equalization transfers should be approved in the context of the fiscal policy of the state (in the medium-term fiscal program of the government - for three years in advance). 3) The objectives of the allocation of equalization transfers should be clearly articulated, and there should be the possibility of their regular monitoring. 4) When planning transfers, it is necessary to take into account funds allocated through other channels. Due to the fact that, in addition to equalization transfers, funds are sent to the regions under the programs of various ministries and departments, the Ministry of Finance must take them into account when allocating transfers. 5) When allocating transfers, possible alternatives should be considered. In some cases, it is more efficient to finance the provision of public services not through lower level budgets, but through a direct payment to the service provider (especially if the national government wants to increase the diversification and efficiency of service delivery).

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Possible options for the distribution of the Fund for Financial Support of the Regions according to the principles of income and cost-income equalization:

Income equalization methods Cost-income equalization methods

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Income Equalization Techniques

Methods that equalize the incomes of regions in proportion to the deviation from a certain value (for example, from the average per capita income for all regions or their groups); methods that bring the income of the regions to a level not lower than the specified one; techniques that are combinations of techniques from the first two groups. At the same time, for each of the methods, an additional option can be distinguished: in addition to calculating transfers based on the unconditional equalization of average per capita incomes of regions, it is possible to carry out a calculation based on equalizing average per capita incomes, taking into account reducing coefficients that stimulate the efforts of regions to collect taxes. Income equalization is based on the provision of financial assistance only depending on the regional differentiation of average per capita income, adjusted using special coefficients (budget spending index). The purpose of introducing a correction factor is to take into account the inter-regional differentiation of the cost of providing public services (that is, it is a kind of "inter-regional deflator" of prices for the provision of public services).

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Techniques of cost-income equalization

Expenditure-income equalization method based on ensuring a minimum level of regional deficit Expenditure-income equalization method based on the distribution of FFSR in proportion to the gap between revenues and expenditures of regional budgets. FFSR distribution method combining the first and second options of cost-income equalization. These methods are based on the provision of financial assistance in accordance with the gap between income (income potential) and expenditure (expenditure needs) of the regions. Just as in the case of equalizing average per capita incomes, it is possible to distribute transfers that would provide a certain minimum level of regional deficit determined by the volume of the Fund, a simple distribution of FFSR funds in proportion to the gap between incomes and expenditures of regional budgets, as well as a combination of these two options.

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Canada is a state with a federal structure. Canada is currently made up of 12 federal subjects: ten provinces and two territories. There are also about 5,000 municipalities in Canada, including cities, villages, townships, counties and special service areas.

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The federal government has the authority to regulate issues of war and peace, defense, law and order, the national public debt and public property, the monetary and banking system, trade and commercial relations. The budget system of Canada corresponds to the federal system of public authorities - each level of government has its own budget. The revenue base of the federal budget consists of receipts from federal taxes, fees and other payments, and tax payments and intergovernmental transfers received from the federal budget are credited to provincial budget revenues.

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Each province was entitled to a share of federal tax revenues in its territory, the same for all provinces. Provinces also have the right to raise the federal tax rate on their territory in order to transfer additional tax revenues to their budgets. This procedure applies to income tax on individuals and corporations, tax on goods and services (analogous to value added tax). Taxes on natural resources and property taxes are credited to provincial budgets.

Slide 37

Provincial budgets are required to fund public education, health care, and municipal services. Both levels of the budget system have spending obligations in areas of common interest, such as, for example, agriculture and forestry. The federal government also bears the costs of social security.

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Financial aid

allocated in the form of targeted and non-targeted transfers. There are programs and financial assistance under the financial support plan - non-targeted transfers to equalize budget revenues

Slide 39

Calculation of equalization transfers

The formula is structured in such a way that federal funds are distributed among seven provinces - Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan. These subjects of the federation have income potential below the average level. Income potential is calculated as the difference between the average per capita revenue of each tax for the five provinces as a whole, approved as a federal standard, and the average per capita tax revenue for the province. Tax revenues are calculated at the average rates in force in all provinces. Tax potential is calculated on 33 positions, including direct and indirect taxes.

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Presentation on the topic: Interbudgetary relations

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Description of the slide:

The modern system of interbudgetary financial flows began to take shape in the Russian Federation starting from 1991. The modern system of interbudgetary financial flows began to take shape in the Russian Federation starting from 1991. By this time, before the formation of an independent Russian state, the budgetary system of the RSFSR was part of the centralized budgetary system of the Soviet Union. Due to the absence of any uniform norms for fixing revenue sources and spending powers, for each ATU there were individual proportions for the distribution of tax and non-tax revenues, through which pre-agreed expenses were financed.

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Description of the slide:

The new Constitution of 1993 and the strengthening of the positions of the federal authorities made it possible to carry out a reform of interbudgetary relations in 1994, the main purpose of which was to formalize the distribution of revenues between the federal and regional budgets and the provision of financial assistance to budgets of a lower level The new Constitution of 1993 and the strengthening of the positions of federal authorities made it possible to carry out a reform of interbudgetary relations in 1994, the main purpose of which was to formalize the distribution of revenues between the federal and regional budgets and the provision of financial assistance to budgets of a lower level

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Description of the slide:

As a result of the transformations carried out, the system of federal financial support for the regions currently includes several channels for providing financial resources, which can be divided into two groups: can be divided into two groups: - regular and - irregular types of financial assistance. As part of regular financial assistance, it is necessary to single out, first of all, transfers from the Federal Fund for Financial Support of the Regions, subsidies to the budgets of closed ATOs, and subventions to Moscow. Irregular financial assistance mainly includes expenditures under the implementation of various federal programs, as well as funding from ministries and departments.

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Description of the slide:

The main channel of regularly provided federal financial assistance to the regions is the Regional Financial Support Fund, which, since 1994, has been formed and distributed in accordance with the following principles. The main channel of regularly provided federal financial assistance to the regions is the Regional Financial Support Fund, which, since 1994, has been formed and distributed in accordance with the following principles. The value of the FFSR is approved in the form of a fixed share of tax revenues of the federal budget (in 1994 - 22% of VAT revenues, in 1995 - 27% of VAT revenues to the federal budget, in 1996-97 - 15% of tax revenues of the federal budget for except for import duties...). Every year 70-80 subjects of the Federation out of 88 have the right to receive transfers from the FFSR.

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Description of the slide:

The primary moment in the organization of the system of interbudgetary relations is the question of the distribution of expenditure obligations between the levels of government. The primary moment in the organization of the system of interbudgetary relations is the question of the distribution of expenditure obligations between the levels of government. Economic theory practically does not give recommendations on the distribution of expenditure obligations. It is assumed that a particular public service should be provided by the level of government that most closely represents the community of people that benefits from the provision of this service. From this point of view, for example, it is justified to finance local goods from the municipal budget, and state services of national importance - such as defense, security - from the central budget. However, the majority of public services do not fully fall into any of the listed categories and, therefore, it is not possible to decide on the distribution of obligations for their financing according to theoretical considerations only.

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Description of the slide:

legislative regulation; legislative regulation; financing; administration. At the same time, regulation cannot be quantified, and financing and administration, although they can be quantified, do not reflect the full set of actions of the authority to fulfill the spending obligation.

slide number 11

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Indirect assessment of the spending needs of the regions based on factor analysis. Indirect assessment of the spending needs of the regions based on factor analysis. Assessment of expenditure needs of the regions based on existing targeted transfers. Application of a single norm of budget expenditures for all ATOs of the state. Estimation of expenditure needs of the regions based on actual expenditures.

slide number 12

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This method can be used if there are (identifying) factors that determine the demand and / or cost of providing public services in the ATO (the number of consumers of certain types of public services, the cost of heating and lighting, transport and wages, etc.). This method can be used if there are (identifying) factors that determine the demand and / or cost of providing public services in the ATO (the number of consumers of certain types of public services, the cost of heating and lighting, transport and wages, etc.).

slide number 13

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A similar approach is used in case of insufficient statistical information to analyze the influence of various factors on the amount of expenditure, but at the same time, a certain number of targeted grants are allocated from the national budget. In this case, to calculate the transfer, the ratio of federal funds received in the region per capita and the average grant size for the country is determined, which is then used as one of the coefficients in the transfer distribution formula. A similar approach is used in case of insufficient statistical information to analyze the influence of various factors on the amount of expenditure, but at the same time, a certain number of targeted grants are allocated from the national budget. In this case, to calculate the transfer, the ratio of federal funds received in the region per capita and the average grant size for the country is determined, which is then used as one of the coefficients in the transfer distribution formula. This approach has several advantages, the most important of which is that, when applied, equalization transfers can supplement targeted transfers, and therefore there are no conflicts between ministries and departments responsible for the distribution of targeted and equalization transfers, and lower-level budgets are not deprived of targeted funding sources.

slide number 14

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To implement this approach in practice, it is necessary that between the provinces there is no significant differentiation in the cost of providing public services. To implement this approach in practice, it is necessary that between the provinces there is no significant differentiation in the cost of providing public services.

slide number 15

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It is obvious that such an approach is not possible to use on a long-term basis, because regional authorities have the opportunity to influence the amount of spending in order to receive a larger transfer in the future. It should be borne in mind that the state always contains underdeveloped territories with low cost of public services due to: - inter-regional price differentiation, - inability to provide certain types of services due to lack of necessary infrastructure, - any other reasons related to the level of economic development.

slide number 16

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Revenues of territorial budgets include: Revenues of territorial budgets include: 1) Own revenues of budgets - revenues fixed on a permanent basis in whole or in part 2) Regulatory revenues - these are federal and regional taxes and other payments for which deduction standards are set. Regulatory revenues are made to avoid vertical and horizontal imbalances.

slide number 17

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There are three options for assigning tax revenues to local authorities: There are three options for assigning tax revenues to local authorities: 1) all tax revenues coming from the territory under their jurisdiction are assigned. At the same time, it is established that part of the income is transferred to the highest level of the budget system to meet the spending obligations of the national government. Because this option may reduce the efficiency of inter-territorial income redistribution as well as hinder fiscal stabilization, it is not the most efficient method of mobilizing public resources and may create inadequate incentives for local governments to fund national spending commitments.

slide number 18

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The second option implies assigning all taxes to the national government and the subsequent transfer of funds to lower government bodies through grants or other transfers, as well as by setting standards for deductions of income from all or individual taxes to the budgets of a lower level. The second option implies assigning all taxes to the national government and the subsequent transfer of funds to lower government bodies through grants or other transfers, as well as by setting standards for deductions of income from all or individual taxes to the budgets of a lower level. The main disadvantage of such a system is the complete lack of connection between the level of government on whose territory certain taxes are collected and the level of spending decisions - the main prerequisite for creating an effective system of interbudgetary relations. Without the existence of such a link, there is a risk of fiscal illusion, i.e. the risk of overfunding local spending needs. On the other hand, the likelihood of frequent and unjustified reductions in the volume of financial resources transferred to the lower levels of the budget system may lead to the impossibility of creating a stable system for financing public services at the local and/or regional level.

slide number 19

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3) Assignment of a certain part of tax powers to local or regional authorities, and, if necessary, compensation for missing revenues by fixing shares from regulatory taxes or by transferring transfers to ATO budgets. 3) Assignment of a certain part of tax powers to local or regional authorities, and, if necessary, compensation for missing revenues by fixing shares from regulatory taxes or by transferring transfers to ATO budgets. A key issue in the implementation of such a revenue distribution scheme is the choice of taxes assigned to local / regional authorities (local / regional taxes), as well as federal taxes, a certain share of the proceeds of which is credited to regional / local budgets (regulatory taxes). In the case of assigning tax powers to the lower levels of government, which makes it possible to link the amount of the tax burden and the spending decisions made, local authorities in their actions are guided by considerations of the "cost-benefit" type, which leads to an increase in economic efficiency.

slide number 20

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slide number 21

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Grants can be allocated in two ways: Grants can be allocated in two ways: - in the form of non-targeted - targeted transfers. Each grant can, in turn, be allocated in a fixed amount or be subject to renewal, be conditional or unconditional, as well as be allocated on the terms of co-financing. The choice of a specific mechanism for allocating interbudgetary transfers depends on the objectives of economic and fiscal policy at a given time.

slide number 22

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The existence of a fiscal gap between the region's ability to generate revenues and its spending needs, arising from the advantages enjoyed by the central government in tax collection and the relatively higher level of spending by regions and localities; - the existence of a fiscal gap between the region's ability to generate income and its spending needs, arising from the advantages that the central government has in tax collection and the relatively higher level of spending by regions and localities; - the need to reduce fiscal inequities arising from the difference in revenue generating ability that exists between different regions (especially those that are not dependent on regional policies) and their different spending needs; - the need to correct fiscal inefficiencies arising from differences in net fiscal benefits between regions; - the existence of positive externalities (due to the flow of funds from other administrative units) from various regional expenditures; - Ensuring a certain uniformity in the main types of regional spending programs.

slide number 23

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Transfers are funds received from federal and regional funds for the financial support of regions, the amount of which is calculated according to the methodology established by the Government. Transfers to the population - budgetary funds for financing mandatory payments to the population: pensions, scholarships, allowances, compensations, other social payments established by law. Grant - funds provided to the budget of another level of the budget system on a gratuitous and irrevocable basis to cover current expenses. Subvention - funds provided to the budget of another level of the budget system or to a legal entity on a gratuitous and irrevocable basis for targeted spending. Subsidy - budgetary funds transferred to the budget of another level, legal or natural persons, on the terms of shared financing of targeted expenses.

slide number 24

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regarding the distribution of interbudgetary transfers regarding the distribution of interbudgetary transfers, a set of equalizing transfers is needed: from targeted (conditional) transfers to solve specific problems of economic policy, to other non-targeted (unconditional) transfers to equalize the vertical or horizontal imbalance of the budget system. At the same time, it is necessary to avoid, as far as possible, transfers aimed at simply covering the gap between ATO budget revenues and their expenditures in order to avoid discouraging fiscal efforts and reducing the responsibility of regional authorities for tax and spending policies.

slide number 25

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However, simply covering the deficit of lower budgets should not be the goal of the policy of allocating transfers, since vertical imbalances can arise as a result of fiscal policy at the level of a subnational government: for example, as a result of decisions to increase spending or not to increase tax rates. However, simply covering the deficit of lower budgets should not be the goal of the policy of allocating transfers, since vertical imbalances can arise as a result of fiscal policy at the level of a subnational government: for example, as a result of decisions to increase spending or not to increase tax rates.

Description of the slide:

Application of separate mechanisms for leveling vertical and horizontal imbalances. Application of separate mechanisms for leveling vertical and horizontal imbalances. Equalizing the deficit of subnational budgets is carried out by dividing tax revenues and allocating transfers from the national budget, while equalizing the fiscal potential is carried out with the help of horizontal payments from regions with high budgetary security to low-income regions. A similar system applies in the Federal Republic of Germany.

slide number 28

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2) A comprehensive system of equalization transfers. 2) A comprehensive system of equalization transfers. Both vertical and horizontal imbalances are leveled out with the help of a unified system of equalization transfers and special grants. A similar approach is used in the budget systems of Australia and Canada.

slide number 29

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3) Leveling only the vertical imbalance of the budget system. 3) Leveling only the vertical imbalance of the budget system. Subnational budget deficits are leveled out by fixing regulatory taxes and equalization transfers, but no separate measures are taken to equalize horizontal imbalances. In this case, the migration of capital and labor occurs as a result of the difference in income in the ATO, as well as the net fiscal benefit in the regions (net benefit from government spending and taxes paid). With this version of the budget policy, it is possible to allocate special grants, which, among other purposes, can have a horizontal equalizing effect. This approach is widespread in the US.

slide number 30

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1) The system of interbudgetary transfers should primarily pursue the goals of macroeconomic stabilization. 1) The system of interbudgetary transfers should primarily pursue the goals of macroeconomic stabilization. 2) The method of distribution of equalization transfers should be approved in the context of the fiscal policy of the state (in the medium-term fiscal program of the government - for three years in advance). 3) The objectives of the allocation of equalization transfers should be clearly articulated, and there should be the possibility of their regular monitoring. 4) When planning transfers, it is necessary to take into account funds allocated through other channels. Due to the fact that, in addition to equalization transfers, funds are sent to the regions under the programs of various ministries and departments, the Ministry of Finance must take them into account when allocating transfers. 5) When allocating transfers, possible alternatives should be considered. In some cases, it is more efficient to finance the provision of public services not through lower level budgets, but through a direct payment to the service provider (especially if the national government wants to increase the diversification and efficiency of service delivery).

slide number 31

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slide number 32

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Methods that equalize the incomes of regions in proportion to the deviation from a certain value (for example, from the average per capita income for all regions or their groups); Methods that equalize the incomes of regions in proportion to the deviation from a certain value (for example, from the average per capita income for all regions or their groups); methods that bring the income of the regions to a level not lower than the specified one; techniques that are combinations of techniques from the first two groups. At the same time, for each of the methods, an additional option can be distinguished: in addition to calculating transfers based on the unconditional equalization of average per capita incomes of regions, it is possible to carry out a calculation based on equalizing average per capita incomes, taking into account reducing coefficients that stimulate the efforts of regions to collect taxes. Income equalization is based on the provision of financial assistance only depending on the regional differentiation of average per capita income, adjusted using special coefficients (budget spending index). The purpose of introducing a correction factor is to take into account the inter-regional differentiation of the cost of providing public services (that is, it is a kind of "inter-regional deflator" of prices for the provision of public services).

slide number 33

Description of the slide:

Expenditure-income equalization method based on ensuring a minimum level of regional deficit Expenditure-income equalization method based on ensuring a minimum level of regional deficit Expenditure-income equalization method based on the distribution of FFSR in proportion to the gap between revenues and expenditures of regional budgets. FFSR distribution method combining the first and second options of cost-income equalization. These methods are based on the provision of financial assistance in accordance with the gap between income (income potential) and expenditure (expenditure needs) of the regions. Just as in the case of equalizing average per capita incomes, it is possible to distribute transfers that would provide a certain minimum level of regional deficit determined by the volume of the Fund, a simple distribution of FFSR funds in proportion to the gap between incomes and expenditures of regional budgets, as well as a combination of these two options.

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The federal government has the authority to regulate issues of war and peace, defense, law and order, the national public debt and public property, the monetary and banking system, trade and commercial relations. The federal government has the authority to regulate issues of war and peace, defense, law and order, the national public debt and public property, the monetary and banking system, trade and commercial relations. The budget system of Canada corresponds to the federal system of public authorities - each level of government has its own budget. The revenue base of the federal budget consists of receipts from federal taxes, fees and other payments, and tax payments and intergovernmental transfers received from the federal budget are credited to provincial budget revenues.

slide number 36

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Each province was entitled to a share of federal tax revenues in its territory, the same for all provinces. Provinces also have the right to raise the federal tax rate on their territory in order to transfer additional tax revenues to their budgets. Each province was entitled to a share of federal tax revenues in its territory, the same for all provinces. Provinces also have the right to raise the federal tax rate on their territory in order to transfer additional tax revenues to their budgets. This procedure applies to income tax on individuals and corporations, tax on goods and services (analogous to value added tax). Taxes on natural resources and property taxes are credited to provincial budgets.

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slide number 39

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The formula is structured in such a way that federal funds are distributed among seven provinces - Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan. The formula is structured in such a way that federal funds are distributed among seven provinces - Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan. These subjects of the federation have income potential below the average level. Income potential is calculated as the difference between the average per capita revenue of each tax for the five provinces as a whole, approved as a federal standard, and the average per capita tax revenue for the province. Tax revenues are calculated at the average rates in force in all provinces. Tax potential is calculated on 33 positions, including direct and indirect taxes.