State extra-budgetary funds - an important component of the formation of public finances, which can be used for social and economic needs.
The income and expenses of these funds are generated in accordance with the Budget Code and other legislative acts in the form of annual budget laws.
So, the state extra-budgetary funds are represented by funds intended for financing pension and social security, insurance, medical care and health protection. In a word, we are talking about all the rights enshrined in the Constitution of the Russian Federation.
The execution of the budget of any such fund in the form of an appropriate report is prepared by its governing body and is submitted for consideration and approval to the authorities. The authorities responsible for the execution of budgets of a similar level of the Russian Federation control this process.
State extra-budgetary funds of the Russian Federation are formed with the help of mandatory target payments calculated in certain percentages of the wage fund and can be included in the cost of production.
Today, there are more than 30 such funds in which more than 60 percent of state revenues are concentrated . These organizations are divided into social and economic institutions, which differ in the sources of their formation and the scale of purpose and use.
State social extrabudgetary funds are represented in the form of a system of bodies such as the Pension Fund, social funds , as well as compulsory health insurance.
Extrabudgetary funds of an economic orientation consist of a fund for technological development and R&D, financial support for industries and investment. Their main purpose is in the source of accumulation and expenditure of funds for the needs of the country.
The history of these funds is somewhat older than state budgets. Initially, they had the form of special accounts. However, in the process of development of the state, the need arose to constantly attract more funds. It was then that modern state extra-budgetary funds were formed. It was with the help of these organizations that it became possible to accumulate a larger amount of funds, subsequently directing them to specific goals related to health care, pension payments and insurance.
At the very beginning of their formation, the funds functioned on a temporary basis, which provided for the cessation of their activities after achieving the specific goal of the state. With the advent of new tasks, new organizations were created that were able to eliminate such a fundamental shortcoming of the previously existing system as a lack of finances in some funds and their excess in others.
In the transition to a market economy, the appearance of these funds in Russia is due to several reasons:
- the need for social protection of citizens during economic instability and unemployment;
- use of funds for its intended purpose;
- the need for sufficient finance to address social issues;
- using the credit mechanism, it becomes possible to cover the budget deficit.
State extra-budgetary funds have certain features:
- strict planning by state authorities of their size;
- the use of financial resources of these funds for the needs of the state, not included in the main budget;
- Contributions are tax payments that are established by the state and must be mandatory.