RUSSIAN ECONOMY LECTURE 9 FINANCE & INVESTMENT Vera Valentinovna Ageeva Tomsk Polytechnic University Institute of Humanities, Social Sciences & Technologies Department of History and Regional Studies Plan Finance system Budget System (Federal Treasury) Case Study Subsidized Regions Tax system Banking development and reforms Investment The Federal Reserve System Trams in Russia The total length is of 2669 km and 900 m (all over the country in 2015) There are 61 cities with trams (from1113 cities) in Russia (+ 2 in the Crimea) The largest tram system are: St. Petersburg km. Moscow km. Nizhny Novgorod - 80 km. Ekaterinburg - 78 km. Samara - 75 km. Tram system length in msk is about 20,5 km. After the collapse of the Soviet Union tram system length reduced more than 400 km. Tram movement was closed in such cities as Arkhangelsk, Astrakhan, Voronezh (the largest closed system), Grozny, Ivanovo, Ryazan Floods in St. Petersburg St. Petersburg is located near the Neva river mouth on the shore of the Gulf of Finland. Water (branches of the Neva delta) covered 7% of the city territory (100 square km). The length of all rivers and sleeves is 282 km. Due to the lowland character of the territory floods occurred when the rise of water was 1.5 meters. Reasons of floods are wind surge of waters from the Gulf of Finland to the Neva (Atlantic cyclones, storms). Snowmelt is the reason of floods in spring. The construction of new St. Petersburg Flood Protection System was finished in 2012. The financial system of the Russian Federation consists of the elements that characterize the state structure of the country and the economic foundations of its economic activity. The main elements of the system are: the Federal Budget, extra-budgetary funds, the banking system. The current state of these elements is not effective enough. What is The Budgetary Process? The Budgetary Process A government budget is a legal document that is often passed by the legislature, and approved by the chief executive. The Budgetary process is the process of consideration, submission and implementation of the federal budget. What are the main functions of budget? The main functions of budget The distributive function The controlling function The legislation The budget system of Russia is organized on the basis of the federal law Of the Principles of the budget system and the Budget Process The Budget System of Russian Federation The Budget System of Russian Federation consists of The federal budget The budgets of republics, regions, and two cities (Moscow and St. Petersburg) The budgets of cities, towns and other local regions. Public financial control The main purpose of Public Financial Control is to promote greater efficiency in the work of government authorities and local government bodies. The area of State Financial control includes: Control over the implementation of the federal budget Federal extra-budgetary funds The organization of cash flow The use of credit resources Internal and external debts Tax privileges and advantages The System of Public Financial Control in RF The Accounts Chamber The Central Bank The Ministry of Finance The State Tax Service The State Customs Committee Many others Main forms of public financial control: Monitoring Public research Public investigation Public expert examination State Extra-budget Funds of the Russian Federation. The Russian Tax Code (Russian: ) is the primary tax law for the Russian Federation. The Code was created, adopted and implemented in three stages. The first part, enacted July 31, 1998, also referred to as the General Part, regulates relationships among taxpayers, tax agents, tax-collecting authorities and legislators, tax audit procedures, resolution of disputes, and enforcement of law. The second part, enacted on August 5, 2000, defines specific taxes, rates, payment schedules, and detailed procedures for tax calculations. It was significantly amended in 20012003 with additions like the new corporate profits tax section and the new simplified tax system for small business. The Code is subject to regular changes which are effected through federal laws. The Tax Code is designed as a complete national system for federal, regional and local taxes but excludes customs tariffs. Rules and rates of regional and local taxation must conform to the framework established by the Code. Taxes or levies not listed explicitly by the Code or enacted in violation of its specific provisions are deemed illegal and void. The Russian tax system tends to use moderate flat or regressive tax rates. It is highly centralized for a federal state and relies heavily on proceeds from oil and natural gas corporations. In 2006 the tax burden on oil companies exceeded 45 percent of net sales (compared to 12 percent in construction and 16.5 percent in telecommunications). Rates for oil-related taxes and tariffs, unlike regular taxes, are set not by the Tax Code but by government decree. The Russian Ministry of Finance estimates that revenues regulated by the Tax Code will account for 68 percent of federal revenue in 2008 fiscal year, rising to 73 percent in 2010. Tax system The banking system of the Russian Federation The banking system of the country is one of the main components of the economic body, it forms huge amounts of capital, serves the investment and production needs of enterprises, as well as the needs of the population in additional financial resources. The diversity and complexity of the changes necessitate their deeper understanding, as well as the desirability of an effective mechanism development of the banking sector in the current post-crisis market conditions. The banking system of the country is an active participant in a full-scale financial modernization of the Russian economy. In accordance with the concept of the long-term socio-economic development of the Russian Federation up to 2020 it is noted that it is supposed to create a financial center in this country for the implementation of dynamic economic development, innovation and strengthening of Russia's position in the world community. To achieve this goal huge amounts of money will be required and for that it will be needed to involve the banking system. The participation in innovative modernization of the economy will allow the banking sector to get real benefits in the form of a significant increase in long-term resources and increasing demand for loans on the part of the real sector of economy as a result of the development and strengthening of the financial condition of business entities, as well as the increase of the investment activity of the population