The budget of the Russian Federation is a complex set of various items of income and expenses. Its effective implementation requires a competent classification of revenue sources, as well as cost areas present in the state financial system. The specifics of the political structure of Russia suggests the formation of a stable structured model for classifying the revenues and expenses of the state budget in one or another category. Do Russian authorities have such a resource?
Budget Classification Overview
Of course, yes. Otherwise, the functioning of the national economy would be impossible. The classification of expenditures, revenues and other budget parameters occupies the most important place in the system of state economic planning. This mechanism involves the accounting, systematization and analysis of information relating to the execution of budget items. Based on this information, subsequently, an assessment of the effectiveness of state policy in the corresponding direction can be carried out, as well as the identification of possible mechanisms for its optimization.
Federal standards
The formation of general principles for the classification of budget revenues and expenditures in Russia is built at the federal level through the publication of relevant regulatory legal acts, and is subsequently delegated to regions and municipalities. The fact that the development of standards and norms by which the revenue items and the costs of the state budget are assigned to certain categories is implemented at the federal level - the most important factor in the sustainability of the national economy, and in many ways also the political system.
The budget classification of expenses and income involves a grouping of the relevant items according to the degree of similarity of the sources of income and the channels for investing money in the treasury and is used both for the purpose of drawing up financial plans and in the process of their implementation. The key task of the state is to ensure the comparability of certain indicators in the budgets of different levels - federal, regional, municipal.
The structure of the budget classification in the Russian Federation
On the basis of what principles is the budget classification of expenses carried out in Russia? First of all, there are 2 main mechanisms for its implementation.
- The first is the classification of income. It involves the grouping of budget revenue at all levels in relation to the sources that form it, and in accordance with the provisions of regulatory law. Categories of income are determined by articles that combine certain sources of revenue on a common basis. This may be, for example, customs duties.
- Secondly, it is a classification of budget expenditures. It is also a grouping of costs allocated to various levels of the public finance system. The classification of expenses reflects the direction of cash flows in specific areas in order to solve the key tasks facing the state - the development of the economy and improving the welfare of citizens.
The budget classification in the framework of the Russian model involves the allocation of revenue and costs to sections, subsections, and also targeted budget items that reflect the direction of cash flows in the field of solving specific types of tasks facing the state and suggest the implementation of certain economic activities.
Classification of expenses and budget revenues of the Russian Federation can also be carried out on economic grounds. This mechanism involves the grouping of various articles based on their economic content. As a rule, it is assumed the allocation of current and capital costs. Also, the economic classification of income and expenses involves the subsequent preparation of estimates for specific budget organizations.
Departmental classification
The most important component of the cost allocation system in the framework of state financing is the activity of departments. What are they? First of all, the fact that the authorities themselves can determine certain mechanisms for assigning budget items to specific categories. Thus, departmental classification of expenditures of the state financing system is practiced. It is a grouping of cost items at the level of budget systems of constituent entities of the Russian Federation. The main task of the authorities involved in this area of work is to allocate budget resources to managers.
Departmental classification of items of expenditure most often acts as a mechanism for the distribution of the relevant appropriations. The criteria here are the same as we noted above - the allocation of costs to certain sections, subsections, or target articles (which, in turn, can be further classified into sub-articles and other elements of financial support for the activities of government bodies and institutions). As for the managers of budgetary funds at the level of regions of the Russian Federation, as well as entities in a similar status engaged in work at the level of municipalities, their lists are approved by executive authorities or competent local authorities.
Classification significance
The classification of revenues and expenditures of the state budget of the Russian Federation is of great importance. The effectiveness of its implementation directly affects the quality of functioning of the state financial system of Russia. The specifics of the budget policy of the Russian Federation is largely determined by the features of the structure of public administration, the characteristics of the national model of the federal structure of our country.
Therefore, it is extremely important from the point of view of maintaining the integrity and stability of the political system to have a structured model for the classification and distribution of revenue and budget costs. The principles of its building should be clear and open both for federal structures that make key decisions in the field of financial management, and for regional and municipal authorities.
The classification considered by us, in the opinion of experts, as a whole, is built quite logically. The items of income and expenses provided by the Russian budget system, which is very important, are the same for all levels of public finance management. This aspect makes sense to consider in more detail.
The unity of the budget system
So, the most important feature that characterizes the classification of budget revenues and expenses in the Russian model is the unity of approaches and criteria for classifying them at one or another category at the federal, regional and local levels. Therefore, the key norms governing this mechanism are approved at the level of the highest authorities. As a rule, the relevant sources of law take the character of federal law. In turn, at the level of constituent entities of the Russian Federation or municipalities, the necessary detailing of regulatory norms can be carried out by issuing regional or local laws. The main thing in this case is not to violate the general principles of budget classification enshrined at the federal level.
We investigated the key theoretical principles by which the authorities in the Russian Federation classify the items of expenditure and income of the state financial system into one or another category. We saw that there are a number of basic approaches to building such a scheme, which are based on economic criteria, or, for example, the methods used in specific departments. Let us now consider a number of practical points that reflect how the classification of government spending and income is carried out. Let us examine the very categories by which revenue and expenses of the state financial system are distributed in the Russian Federation. Let's start with the income.
Income classification
The classification of budget revenue is expressed in the classification of its sources in groups, subgroups and specific articles.
Regarding groups, tax revenues can be distinguished. Key subgroups include:
1. Taxes on goods, services, licensing and other fees. These include:
- VAT
- excise taxes on products or raw materials that are produced in Russia or imported from abroad;
- federal, regional, as well as local fees that are classified as licensed;
- tax on the acquisition of foreign currency, as well as payment documents that are expressed through foreign currency;
- UTII.
2. Property fees. These include taxes:
- on property of enterprises;
- on the property of individuals;
- for real estate;
- for inheritance or gift.
3. Fees for the use of natural resources located in the state. Among those:
- payments for subsoil use;
- collection for the reproduction of the mineral resource base;
- tax on additional revenue from hydrocarbon production;
- tax on the right to use water resources, wildlife objects;
- forest, water, environmental, land taxes.
4. Fees related to trade between the Russian Federation and other countries, with foreign economic transactions. Among those:
- customs, state fees and duties;
- Contributions to various state-owned funds;
- fees for gambling, advertising;
- road and transport taxes.
Another major group of budget revenue sources is non-tax revenues. The following main subgroups are present in their structure:
1. Property income on assets that are owned by the state, municipalities, or arising as a result of certain commercial activities. These include:
- income from the use of assets owned by the state or municipalities;
- dividends on securities of state origin;
- proceeds from the lease of state property;
- interest received as a result of the formation of bank deposits at the expense of free budget funds, as well as those that arose as a result of the provision of loans within the country;
- revenues arising from the provision of services or compensation of state costs;
- profit of the Central Bank of the Russian Federation;
- payments from state or municipal institutions;
- a fee for fishing quotas for joint ventures and foreign organizations;
- other income from assets owned by the state or municipality.
2. Income from the sale of assets owned by the state or local government. These may be:
- proceeds from the privatization of enterprises owned by the state;
- income arising from the sale of shares by state authorities;
- revenue that appears as a result of transactions with residential real estate;
- income from the sale of production or non-production resources, transport, various types of equipment;
- proceeds from the sale of confiscated or ownerless property, treasures, and other assets that have become the property of the state or municipality.
- income from the sale of state stocks;
- revenue from the sale of land resources, as well as intangible assets;
- revenues from non-governmental entities in the format of capital transfers;
- payments and fees related to the category of administrative;
- fines, payment of damages;
- revenue arising from foreign economic activity;
- other income attributable to the category of non-tax.
3. Gratuitous receipts. Their sources may be:
- budgets of various levels;
- state funds, organizations;
- supranational structures.
Classification may include funds that are transferred to trust funds. Actually, this type of institution can also have income.
4. Revenue from trust funds. Among those:
- road, environmental funds;
- structures related to the activities of the customs system of Russia;
- fund to combat crime;
- structures under the jurisdiction of the Federal Border Service and the Ministry of Atomic Energy;
- Fund for the reproduction of the mineral and raw materials base.
These are the key categories within which Russian budget revenues are classified. As we determined above, their essence is aimed at maintaining the unity of the budget system of the Russian Federation, adapted to the specifics of the political structure of the country. But no less important for us will be the study of the principles by which state authorities also classify state budget expenditures.
Cost classification
So, the criteria for classifying income in one category or another, adopted in the Russian Federation, we have considered. Let us now examine what constitutes a functional classification of expenditures of the budget of Russia. Its main category is the section. There are a lot of specific varieties of them. So, the modern classification of types of budget expenditures in the Russian Federation involves the allocation of the following list of sections:
- state and municipal administration;
- judicial branch;
- activity in the international arena;
- army;
- law enforcement agencies;
- the science;
- industry, energy and construction industries;
- activities in the field of agriculture, fishing;
- environmental protection;
- transport sector;
- communications, information technology;
- market infrastructure;
- housing and communal services;
- prevention and response to emergencies;
- education;
- Culture and art;
- MEDIA;
- health care, physical education;
- socially oriented policies;
- payments on external government loans;
- the formation of state reserves;
- budgetary subsidies and other support measures;
- optimization of the composition of weapons, including in the framework of international agreements;
- training of the armed forces in terms of mobilization;
- financing the activities of trust funds;
- other types of expenses.
Let us now examine what constitutes the economic classification of budget expenditures. As part of it, it is assumed that costs are attributed to the following main categories:
1. Current expenses. These include:
- payment of interest on loans;
- subsidies, transfers;
- expenses associated with the recognition of foreign ownership of assets.
2. Capital expenditures. Among those:
- investments in fixed assets;
- formation of a state reserve;
- purchase of land, as well as intangible assets;
- transfers related to capital.
3. The provision of budget loans. Among the activities of the corresponding type:
- the provision of loans within the budget system ;
- the provision of loans to foreign countries;
- repayment of loans.
It is possible to highlight additional criteria for detailing costs. The economic classification of budget expenditures may involve the determination of the widest range of items where public finances can be directed.
Additional criteria for the classification of income and expenses
So, for example, transfers to citizens are sometimes allocated to a separate category. They represent budget funds that are aimed at financing pensions, benefits, compensations, social benefits, as well as scholarships - all those financial support measures that are provided for by federal, regional or municipal legislation.
The budget classification of budget expenditures may involve the allocation of additional substantive articles on the basis of current categories and sections. For example, if we are talking about subsidies - funds that are provided by the state in the required amounts to the regional or municipal budget, organization or citizen on the basis of shared cash security, then they can very well be classified into various sub-items.
State standards in business
It is noteworthy that the functional classification of expenses, as well as various methods for classifying budget revenues as one or another category that are used by state authorities, can be used in business in the form of fairly similar concepts. How is this possible?
The fact is that the classification of income and expenses of the organization may also imply their attribution to sections, subsections, substantive articles and additional categories. The methodology used by government and business, in this sense, can be very similar.
For example, the classification of the organization’s income and expenses may involve their classification, if we talk about the former, to a specific area of origin, and if we talk about the latter, to a specific area of investment activity (for example, improving the production base, improving infrastructure, attracting new personnel, building new objects, etc.). In turn, in the framework of each of the noted areas of activity of the enterprise, the costs will be specified.
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