Financial Decentralization in Belarus

Transcription

1 Financial Decentralization in Belarus Dmitriy Sokol, PhD

2 Cargo Cult Late 19th century-end of WWII in Melanesia Cargo in Melanesia, was seen to be made by ancestors. The U.S. military had somehow intercepted the goods meant for the Melanesians. Cults emerged based on prophets who had foreseen how to control the cargo. Rituals were developed that mimicked activities of the soldiers (marching with sticks over their shoulder, marking on paper, wearing European clothes.) When these rituals failed, groups went so far as to destroy sacred objects, crops and food sources, thinking that cargo would not arrive for them as long as they had these items. Results were tragic.

3 Cargo cult in South Pacific

4 Cargo Cult Late 19 th century-end of WWII in Melanesia 50 years ago Present day: acculturation has occurred, still keep rituals of original cult, but the mood is no longer desperate

5 The term "cargo cult" has been used metaphorically to describe an attempt to recreate successful outcomes by replicating circumstances associated with those outcomes, although those circumstances are either unrelated to the causes of outcomes or insufficient to produce them by themselves. Novelist Chinua Achebe in his 1984 book The Trouble with Nigeria criticized what he called the "cargo cult mentality" of the rulers of many developing countries who issued lofty proclamations about the future of their countries but fail to exert the necessary effort to bring about those improvements.

6 The right of local self-governments according to the legislation The state ownership in Belarus acts in the form of a republican property (a property of the Republic of Belarus) and communal (a property of administrative and territorial units) item 1 of Art. 215 of the Civil code of the Republic of Belarus. The analysis of standards of the Constitution and other legal acts allows to draw a conclusion that, despite insufficiently accurate regulation, a property on natural resources belongs to the Republic of Belarus (a republican property), and local authorities and self-self-government have the certain delegated powers regarding the order of natural resources usage.

7 Local Finance the local budget the state and communal properties belonging to local governments other financial resources

8 STRUCTURE OF CONSOLIDATED BUDGET OF BELARUS 2013, % ALL INCOME Republican budget 55,6 Local budget 44,4 INCOME TAX 100 PROFIT TAX 24,4 75,6 PROPERTY TAX 100 VAT 70,3 29,7 EXCISE DUTY 100 TAXES ON FOREIGN ECONOMIC ACTIVITY 100 OTHERS 56 44

9 STRUCTURE OF LOCAL BUDGET INCOMES IN BELARUS 2013, % Own Revenues Donations Subventions and other intergovernmental transfers BREST OBLAST 58,4 32,7 8,9 VITEBSK OBLAST 63,4 31,6 5 GOMEL OBLAST 60,7 23,9 15,4 GRODNO OBLAST 58,6 35,7 5,7 MINSK ABLAST 77,8 14,9 7,3 MOGILEV OBLAST 54 39,7 6,3 MINSK CITY 98,9 1,1

10 Deficit / Surplus of local budgets in Belarus , bln. rubles Minsk city Mogilev oblast Minsk oblast Grodno oblast Gomel oblast Vitebsk oblast Brest oblast

11 How it looks

12 How it is

13 Local finance in Belarus CENTRAL Budget competence Taxation LOCAL

14 Framework proportion in Belarus: current situation Central Oblast Basic Primary ATD Population Budget

15 Framework proportion in Belarus: proposals Central Oblast Povet ATD Population Budget

16 Distribution of the tax income on levels of the Republic of Belarus budget Taxes of the republican budget of regional budgets of povetovy budgets Tax income of the budget of Minsk Republican taxes excises tax on acquisition of automobile vehicles charge for journey of automobile vehicles of the foreign states on highways of the general using of Republic of Belarus patent fees charge for providing the right of import on the territory of Republic of Belarus of ozonorazrushayushchy substances customs duties and customs duties offshore collecting consular fees stamp АГА duty «Фонд імя Льва Сапегі» tax on the income of carrying out video interactive games

17 Distribution of the tax income on levels of the Republic of Belarus budget Taxes of the republican budget of regional budgets of povetovy budgets Tax income of the budget of Minsk The divided taxes state tax value added tax profit tax ecological tax tax on the income, except a tax on the income of implementation of lottery activity tax on the income of implementation of lottery activity income АГА «Фонд tax from імя Льва individuals, Сапегі» except estimated from NGO the Lev income Sapieha received Foundation from implementation of business activity enlisted in the republican budget according to acts of no more than 60 % no more than 50 % no more than 20 % no more than 50 % on republican lotteries of 100 % except enlisted in the republican budget, 100 % except enlisted in the republican budget, 20 % 20 % 40 % 20 % 30 % 50 % 30 % 50 % 80 % 25 % 25 % 50 % on regional on city lotteries lotteries 100 % on lotteries of Minsk 30 % 70 %

18 Distribution of the tax income on levels of the Republic of Belarus budget Local taxes other taxes and fees Taxes of the republican budget of regional budgets of povetovy budgets of the budget of Minsk income tax from the individuals, estimated from the income received from implementation of business activity tax at the simplified system of the taxation uniform tax on individual businessmen and other individuals uniform tax for producers of agricultural production charge for implementation of craft activity charge for activity implementation on rendering of services in the agroecotourism sphere collecting from suppliers of agricultural production, medicinal herbs, mushrooms, wild-growing fruits and berries tax on a gaming on objects of tax on real estate regional on objects of submission, regional not less than 60 submission, no %; more than 40 % on another ground tax tax on retails tax on services tax on АГА advertising «Фонд імя Льва Сапегі» collecting ПОО «Фонд from им. users Льва Сапеги» collecting NGO Lev from Sapieha suppliers Foundation target collecting

19 Characteristics of fiscal model in Belarus Negative 1. The existing model has a retrospective character and is consequently inert; 2. Public discussions on budget drafting are untimely to influence the process; 3. The budget is not used by the state as a tool for strategic administration; 4. The expenditures of local budgets are opaque: inter-budgetary relations are fixed only with a higher level of the budget; 5. Local interests and needs are levelled, which leads to the absence of initiative and dependant moods; 6. Absence of budgetary independence (it has a declarative character) which results in a system of estimate financing, instead of budgetary planning. Positive 1. Transparent, manageable model of settlements (that gives an opportunity for unilateral reform); 2. Social and regional contradictions smooth out in such a system (everything is solved by the centre); 3. The principle of budgetary independence is fixed formally (it is observed only at the offset of mutual debts between budgets); 4. The cash stopgap measures are bridged technically within the inter-budgetary framework (only with the budget of higher level); 5. The budgetary system is not overloaded with one-level inter-budgetary relations.