In the first quarter of 1995, the taxrevenues amounted to 22.99% of GDP, which corresponds to the share of the taxrevenues in GDP to the end of 1994; the shares of taxes in the tax revenuesmade: 27.40% for the profit tax, 27.40% for the VAT, 10.48% for the income tax,and 4.67% for the excise taxes. The relatively low share of the income tax maybe explained, in particular, by the consequences of the re-evaluation which hadno time to be eliminated by the inflation. But it should be noted that therelatively low shares of the taxes in the shares of GDP may be also explainedby the significant growth of GDP: in percentage to the preceding months GDPgrowth made 5.88% in February and 13.65% in March.
To eliminate the influence of thestatistical particularities of the accounting of the monthly GDP, the taxrevenues corrected for the prices growth index from December 1994 may beconsidered. If such approach is used, it shows the growth of revenues from allthe taxes, except VAT, from January to March.
The Law УOn Amendments and Supplements tothe Law of the Russian Federation УOn the Profit tax of Enterprises andOrganizationsФФ, #а64‑FZ, dated 25аAprilа1995, made changes in the regulations on theintermediary entities, fixed by the Decree #а2270, which latter fixed, afterlong discussions, (as for the tax placed in the budgets of the subjects of theFederation) the maximal rates of 22% of the profit for enterprises, includingforeign legal entities, and 30% of the profit from the intermediary operationsand transactions for the exchanges, broker offices, banks, and insurers (thelimit rate for the intermediary activities becomes equal to 43%). The same Lawenhances the list of the payers by covering the subsidiaries and otherdivisions of enterprises having their own balances and settlement accounts. Theorder of placement of the profit tax in the incomes of the budgets of thesubjects of the Federation by location of the structural divisions having nosettlement accounts. The share of the profit to be transferred in the budgetsof the subjects of the Federation by location of such divisions in determinedin proportion with the labor payment and cost of the fixed productionassets.
In accordance with the above Law, from1аJanuaryа1995, the enterprises with foreign investments will settle with theBudget as for the profit tax in the general order; namely, they will pay everyquarter-year the advance payments of the tax and submit to the taxation bodiesthe accounts and calculations of the tax on the actual profit.
The Law of 25аAprilа1995, #а63‑FZ, enforced from 28 Aprilа1995,УOn Amendments and Supplements to the Law УOn the VATФФ, abolished the VATprivilege for the housing construction works, and limits the list of the goodscovered by the 10% rate. This list had been approved by the Resolution of theRussian Government #а659 of 1аJuly. In accordance with this Law, the deductionsof the sums paid to suppliers from the VAT to be transferred to the Budget wasallowed for all the paid for, related to the expenses, material resources, notonly for the ones actually related for the expenses. For the tradeorganizations, except the retail trade, the sum of the VAT due is determined asthe difference between the VATs received from the purchasers and paid to thesuppliers. Accordingly, they are also covered by the general order of offset ofthe VAT paid to the suppliers, i.e., by the fact of payment. The liability ofthe Russian partners for the payment to the Budget of the VAT by the foreignentities, selling their products in the RF territory and not registered in theRussian taxation bodies, was introduced.
April and May 1995 were characterized by thegrowth of the tax revenues as percentage of GDP, except for the income tax. Thegrowth of the minimal labor payment from Rb20,500 up to Rb34,400 from 1 April,and up to Rb43,700 from 1аMay resulted in the reduction of the tax inflows downto 2.09% of GDP in May and 2.20% of GDP in June 1995. The accumulated taxinflows also decreased to 2.32% of GDP to June. Hence, the share of this tax inthe tax revenues decreased accordingly (9.40% in the first half-year). Thehighest share of the tax revenues in GDP was received in Aprilа1995: 3045%; ofthem, the shares of the taxes were: 10.77% of GDP for the profit tax, 6.11% ofGDP for the VAT, and 1.67% of GDP for the excise taxes. This happened despitethe growing arrears: they grew for all the taxes from 21.4% of GDP in March to26.89% in April (the relevant figures made 11.21% and 12.23% for the VAT,and4.01% and 7.87% for the profit tax.
However, in May and June the tax revenuesdropped for the taxes on the whole (21.63% of GDP for June, and 24.73% of GDPfor the first half-year), for the profit tax (7.32% of GDP for June, and 8.07%of GDP for the first half-year), and for the VAT (4.86% of GDP for June, and5.68% of GDP for the first half-year). At the same time, the excise taxescontinued growing to 1.71% of GDP for June, and 1.42% of GDP for the firsthalf-year. The arrears grew, in May, to 32.27% of GDP for the taxes on thewhole, and 11.27% of GDP for the profit tax. At the same time, in April, therates of increment of GDP dropped to 7.33%, compared with March, while in Mayand June they grew to 19.11% and 15.71%, respectively.
In the second quarter-year, the tax revenues(in the December 1994 prices) grew, especially in April and May, due, mainly,to the inflow of the profit tax (see Fig.а2.4).
Fig. 2.3
Tax Revenues, % of GDP, by months
Fig.2.4
Actual Tax revenues, by months, in 1995 (inthe prices as of 31аDecember 1995)
The Law of 4 Augustа1995, #а1225‑FZ, amended the terms of paymentof the income tax: it is to be paid by fact of labor payment; the clause on itspayment in the month following the month in which the labor payment iscalculated.
The Law #а116‑FZ, of 27аJulyа1995, increased theminimal labor payment to Rb55,000 from 1аAugustа1995. This may have led to thedecrease of the revenue of the income tax in August (down to 1.91% of GDP) andSeptember (down to 1.79% of GDP). Partially, the decrease of the tax by theamount of excess of the labor payment over the normalized value reflecteditself in the September’s decrease of the revenues of the profit tax down to 5.65% ofGDP.
In total, as of the results of the thirdquarter-year, the tax revenues amounted to Rb245,884.3аbln, or 18.25% of GDP.The shares by taxes in the tax revenues made 33.79% for the profit tax, 23.39%for the VAT, 9.65% for the income tax, and 6.10% for the excisetaxes.
In the real values (in the December 1994prices), the decrease in tax revenues was observed, compared with the periodfrom April to July, except the peak in August due to the growth of the realinflow of the income tax. The growth, in June, of the real revenues from theVAT was accompanied by the drop of the real inflows of the taxes on the whole,and of the profit tax, in particular.
The fourth quarter of 1995 showed the growthof the tax revenues in percentage of GDP, from 18.25% in September to 21.6% inDecember. A certain effect must have come from the practice to include thefinal turnovers of the year in the results of December. When considering thereal values, one can see the growth of the tax revenues on the whole, and ofthe profit tax, the significant growth of the income tax in December (due tothe payments to the employed by the results of the year), and the drop of theVAT inflow in December.
Nevertheless, if the accumulated balance isconsidered, it shows that the share of the tax revenues in GDP continueddeacreasing from 22.14% down to 21.67%. Beginning from the April’s peak in the tax revenues, suchtrend was observed during the three quarters of the year.
In the fourth quarter-year, the shares ofthe taxes in the total volume of the tax revenues grew somehow from 30.98% inSeptember to 32.27% in December for the profit tax, from 9.82% to 12.74% forthe income tax (despite the growth of the minimal labor payment), while theshares of the VAT (from 22.34% to 21.27%) and of the excise taxes (from 10.25%to 7.54%) decreased (see Fig.а2.5). If the accumulated balance is considered,there were no obvious changes in the structure of the tax revenues; a certainincrease of the shares of the income tax and excise taxes, and a certaindecrease of the shares of the profit tax and VAT were observed.
Fig. 2.5
Structures of Tax Revenues, bymonths
A separate attention should be paid to thetaxation of the foreign trade. The individual foreign trade privileges wereabolished, in accordance with the Presidential decree # 244 УOn the Loss ofForce and Effect of the Decisions of the RF President as for CustomsPrivilegesФ, dated 6аMarchа1995, in the two steps: from 11 March, and from15аMay. In accordance with the Law УOn Certain Issues of Granting Privileges toParticipants in the Foreign Economic ActivitiesФ, promulgated by the State Dumaon 24аFebruaryа1995, all the foreign trade privileges, except those envisionedby the Laws УOn the Custom TariffФ, Уon the Excise TaxesФ, and УOn the VATФ,and by the Customs Code, were abolished.
Actually, the privileges for the largestexporters were abolished in accordance with the Order of the State Committeefor Customs of the RF, of 20аDecember 1995, #а763, УOn the Loss of Force andEffect of the Normative Acts of the Russian State Committee for Customs on theIssues of Grant of Privileges for Payment of Custom DutiesФ. Before this, forthe entities having privileges, either the terms of payment were extended, orthe losses were compensated. According to the Ministry of Finance, during theyear, the total volume of Rb3аtrln of compensations was paid.
In 1995, amendments to the order of thetariff control of the foreign economic operations were made by numerousresolutions (see Section 5.2 УControl of Foreign Economic ActivitiesФ),raising, on the whole, the import duties, and decreasing the exportduties.
As Fig.а2.6 shows, these decisions did notinfluence the dynemics of the inflow of the import duties to the Budget. Thisconfirms again, that, in 1995, these inflows were determined, mainly, not bythe duties rates, but by the size of the base, assessed by these importtariffs; its size was determined by the values of the different privileges. In1995, the inflow of the export duties to the Budget was more variable. After acertain growth in the Spring, the value of the export duties reached 1.1% ofGDP (0.5% of GDP in 1994). Then, a smooth decrease of the volume of theserevenues to the Budget was observed, down to 0.95% of GDP for the whole year,compensated, to a certain extent, by the growing revenues from the excisetaxes.
Fig. 2.6
Import and Export Duties to the RF FederalBudget,
aggregate, % of GDP
When analyzing the tax revenues to theBudget, the attention should be paid to the dynemics of the arrears. At the endof 1994, the arrears made 2.4% of the annual GDP for the consolidated Budget,and 1.47% of the annual GDP for the Federal Budget.
As of the percentage of the monthly GDP, atthe and of 1994, the arrears were reducing, and, at the beginning of 1995, thearrears were growing. In January, the arrears for the consolidated Budget made24% of the monthly GDP. In May and June, the process stabilized: the volume ofthe arrears made 32% of the monthly GDP in May and 27% of the monthly GDP inJune (see Figs.а2.7 and 2.8).
A similar dynemics was observed for thearrears for the Federal Budget: in January they amounted to 14.0% of themonthly GDP; as of 1 September, the arrears for the Federal Budget grew up to16.5% of the monthly GDP. The main growth was due to the arrears for theVAT.
In January 1995 the delayed arrears for theconsolidated Budget made 18% of the total sum of the arrears, while inFebruary, March, and June, the relevant values made 74%, 78%, and 82%,respectively.
For the entities of the material productionsphere not paying dividends and having arrears as for the payments to theBudgets and the extra-budgetary funds, the order was established, according towhich 30% of the assets coming to the settlement (current) accounts weredirected to cover the labor payment, while the remaining money were to bedirected to cover the arrears.
Fig. 2.7
Tax Arrears in 1995 (% of the monthlyGDP)
Fig. 2.8
Arrears for 1995 Consolidated Budget of theRF
(prices as of 31 December 1994)
As for the results of the year, the arrearsfor the taxes to be paid to the consolidated Budget made 29% of theDecember’s GDP (inDecember 1994, the relevant figure amounted to 17.4% of the monthly GDP). Thearrears to the Federal Budget dropped by 2.8% amounting to the 15.8% for theyear (in December 1994, the relevant figure amounted to 11% of the monthlyGDP). As most of the arrears volume from a limited number of entities,the commission concentrated on revealing such entities and working with them.As a result of the measures taken by the Federal Budget (according to variousestimates) about Rb4аtrln were received. On the whole, in 1995, the growth ofthe arrears made 2.4% of the annual GDP; but if the arrears accumulated since1992 are considered, the consolidated Budget could have received the additional3.3% of GDP, should they have been covered. The structure of the arrears hadinsignificant variations, and, to the end of the year, the share of the arrearsfor the VAT to the Federal Budget grew, while the relevant share for theconsolidated Budget dropped (see Figs.а2.9 and 2.10).
Fig. 2.9
Structure of Main Tax Arrears to the 1995Federal Budget of the RF
Fig. 2.10
Structure of Main Tax Arrears to the 1995Consolidated Budget of the RF
Statistical Analysis of the Pattern of Tax Revenues
In this Section we have tried to determine,using formal methods, the existence of the dependence of the inflows of certaintypes of taxes upon a series of macroeconomy factors. For such factors we tookGDP, the debtor indebtedness, the inflation, and some other ones. The studyused the methods of the correlational-regressional analysis, based on the databy the RF Goskomstat and of the calculations by the authors. For theperiod for the study, we took the relatively stable, from the viewpoint of thelegal changes, period of 1994 to 1995. The sum of the inflows for every tax onthe monthly basis was taken as the explainable variable.
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