The fiscal policy of the state is in its functions an analogue of the fiscal policy. This is based, firstly, on the literal translation of this concept from the Latin language: fiscus - “treasury of the state” and fiscalis - a term related to treasury. Secondly, the main economic instruments of state regulation in the country are the budget and taxes, which are managed only through fiscal mechanisms.
Based on the foregoing, it is possible to formulate a definition: the fiscal policy of the state is the state system of economic regulation by making appropriate adjustments to government spending, the tax system and, in general, the state budget, to increase the level of production, employment, controlling the inflation index and effective economic growth .
State expenses and taxes are the main tools of this type of policy. The fiscal policy of the state can have different effects on the stability of its economy (positive and negative). This policy should include in its structure such subspecies as budget, tax and stabilization.
State policy aimed at internal stabilization should maintain a balance of aggregate supply and demand using instruments to smooth out economic fluctuations.
The main objectives of this policy are:
- control over the necessary level of employment;
- achieving stability in economic growth;
- controlling inflation.
The stabilization policy of the state should be implemented both through the budget and tax policies, and through the monetary policy, but only with full coordination of actions between them. This policy, due to its influence on the activities of business entities, should be fairly predictable.
As already indicated, taxes are one of the instruments of fiscal policy, and, accordingly, tax policy is a rather important element of state management of economic processes. Therefore, specialists in this field of knowledge pay much attention to its classification and typification. It is advisable to consider the types of tax policy according to certain functional criteria: on narrow specialization, on a territorial basis, on the long-term goals and their scale, as well as on the target policy direction.
Territorial tax policies can be considered at the local, regional, and federal levels. This division is conditional, since today local and regional state bodies do not have tax rights. And while only the federal center is developing the main tax tactics and strategies, and the duties of the lower levels include their unconditional implementation.
A sign of narrow specialization provides for the following types: investment, social and customs policies. This unit is based on the applied value of tax policy.
According to the long-term goals and their scale, they distinguish: strategic policy, implemented over three years, and tactical, designed for a period of up to three years.
The target orientation of tax policy provides for its varieties: control and regulatory, regulatory, fiscal and combined.
The fiscal policy of the state using its tools affects the aggregate supply (the sum of the costs of companies) and the aggregate demand (in other words, total costs). In this case, the revenues and expenditures of the state budget (taxes, public procurement and transfers) are used as instruments.