Financial Journal

8-26

Authors: A.B. Zolotareva

The article describes the main conclusions of the research work aimed at identifying key problems of and ways to improve the legal regulation of public investment in Russia. This work was based on the analysis of legislation and practice of its application. The analysis leads to the conclusion that there are significant shortcomings in the current legislation on planning and implementation of public investment, which hinder their efficiency. Among such shortcomings, the author highlights contradictions on the issue of bodies authorized to make key investment decisions; duplication of the investment component of state programs and national (federal) projects; approval of budget allocations for projects that are not ready for implementation; unclear grounds for raising the price of construction contracts, as well as for centralizing the functions of planning and implementation of sectoral investments, reduction of requirements for justification of investment projects. To mitigate these shortcomings, the author suggests to ensure systematic planning of large investments as part of national and federal projects, excluding these costs from the state programs; as a general rule, to abandon the practice of approving decisions on the implementation of budget investments by individual acts of the government and financing projects without the necessary documentation; to organize a comparative assessment of the efficiency of centralized and sectoral customers in investment management according to legally defined criteria; to return to the use of some previously applied criteria for the efficiency of investment projects.

43-62

Authors: B.I. Alekhin

Russian economic literature on poverty abounds with empirically unsupported assertions about the positive relationship between education and living standards. The purpose of this study is to find empirical evidence of this relationship using panel data for 82 regions of the Russian Federation for 2000–2021. We applied a dynamic OLS estimator to estimate a panel cointegrating equation and found strong negative and statistically significant dependence of indicators of absolute and relative monetary poverty on the highest level of education of the regional working-age population. We also performed the Dumitrescu-Hurlin pairwise causality test, which shows that higher education does not homogeneously cause more absolute monetary poverty, but more absolute monetary poverty does homogeneously cause better education as people try to avoid poverty by raising their educational level. The results of these econometric procedures suggest that the purpose of the study has been achieved.

82-97

Authors: T.I. Vinogradova

Russia is following the course of implementation of the Sustainable Development Goals and shaping its climate strategy. In March 2023, Russia approved the National Action Plan for the second phase of adaptation to climate change for the period until 2025. The public budget is the main tool for achieving the political goals of the government, therefore, in order to implement the public policy in the field of environmental protection and counteraction to climate change, green budgeting is being introduced. The purpose of this article is to actualize the ideas of green budgeting, systematize such budgeting tools within the framework of the general concept of green budgeting, taking into account foreign experience of their use. The author uses general scientific methods, in particular methods of analysis and synthesis of relevant scientific literature, legal information and publications of international organizations. The following conclusions are made: The public budget system is able to minimize those economic activities that are adverse for the environment by creating the possibility of tracking, analysis, evaluation and adjustment of budget expenditures using the tools of green budgeting. The latter does not require restructuring of the public finance management system; the prerequisite for its practical use is the presence of environmental care among the state national goals.

112-122

Authors: I.V. Kiviko, N.I. Malis

Currently, the Republic of Crimea is a subsidized region, and for objective reasons the level of subsidization will not be significantly reduced in the near future, as a result of which the implementation of the indicators reflected in the Law of the Republic of Crimea "On the Strategy of Socio-economic Development of the Republic of Crimea until 2030" does not seem realistic. At the same time, the tax policy of the republic is developing measures to increase its own budget revenues, and they are already giving their positive results. Undoubtedly, the expansion of the revenue side of the regional budget should be based on increasing the manageability of the tax potential, which is formed taking into account the indicators of the dynamics of economic development. The unique geographical, resource and climatic conditions of the Republic of Crimea allow for a widely diversified economic development policy and, accordingly, regional tax policy. Based on the peculiarities of the territorial location and a large number of health resort and recreational complexes, it is possible to form a program of short-term measures to increase the tax base under special tax regimes, personal income tax and other taxes due to the cascade effect of business activity of individuals and SMEs. Full or partial solution of the problem of seasonality of active use of tourist infrastructure will increase the tax potential and, in turn, reduce subsidized dependence on the federal center. The management of tax potential should certainly be based on the analysis of the level of tax burden due to the fact that excessive tax burden can lead to the effect of reverse increase in tax payments.

p. 9-24

Authors: S.D. Shatalov, M.R. Pinskaya, V.A. Prokaev, K.N. Tsagan-Mandzshieva

The article considers the conceptual approaches to the taxation of natural resource use. The purpose of the article is to identify the governmental tax risks in the implementation of various scenarios of mining rent withdrawal and to substantiate the methodology of resource taxation in extraction and processing of solid minerals, based on the principle of tax justice. The authors reveal the factors of tax risks for the state in exercising its sovereign right to the mining rent. The article formulates the requirements to the tax system, the observance of which will allow to consider the factors of the state tax risks. Advantages and disadvantages of certain fiscal payments for extraction of mineral raw materials are determined. It is shown that the resource tax should be based on the present value, calculated as the net present value of the investor for the entire lifetime of the project. The authors propose a mining rent taxation mechanism, which would increase budget revenues while maintaining the incentives for mining companies to invest in exploration. The main forks in the design of such a rent income tax are shown.

p. 41-58

Authors: V.V. Gromov

State regulation of the anthropogenic impact on nature, including the policy of limiting greenhouse gas emissions, makes it necessary to support those enterprises that are willing to invest in climate projects. The relevance of incentives in this field is confirmed by the task set by the Arctic Council chaired by Russia at the Research and Training Conference on Climate Change and Permafrost Thawing 2023, namely to find reasonable, practical solutions for adapting the global economy to such changes. In the area of taxation, there is a solution prepared by the Russian Ministry of Economic Development willing to provide a package of tax benefits for investors. According to the draft, they should be exempted from paying VAT and income tax. At the same time, the variety of previously introduced preferential ‘investment’ tax regimes calls into question the rationality of new tax incentives due to the assumption of their redundancy. The fact is that they have similarities in the basic idea of support aimed at the growth of regional investment activity. For this reason, the purpose of the article is to answer the following questions: Is it really worthwhile to expand the number of tax regimes once again? Is it possible to use existing incentives instead of introducing new ones? To achieve the purpose, we rely on the results of comprehensive, comparative analysis of the developed incentives and the current tax preferential regimes on the example of the Sakhalin region. It stands out among other regions of Russia by its carbon-neutral pilot project and the greater number of preferences already enjoyed by investors, so we can provide representative and practically significant results. The hypothesis of the study is based on the concept of complementarity, meaning that the newly developed tax incentives will contribute to the complexity of the Russian tax system but will not cross the scope of the other mentioned tax regimes. The results show that climate projects have their own specifics in terms of objectives as well as areas of investment that require special approaches in tax policy, since investors create a useful economic effect in the form of reducing greenhouse gas emissions rather than producing goods, and no taxable profit is generated until the investor profitably sells carbon units in the market.

p. 78-90

Authors: I.Yu. Arlashkin

During the structural transformation of the Russian economy, it is especially important to ensure the balance of consolidated regional budgets, in particular through tax decentralization. The article presents the results of modeling the redistribution of tax revenues between the federal and regional levels of the budget system. The purpose of modeling was to find such parameters of tax decentralization which do not worsen the horizontal balance of consolidated regional budgets. The scientific novelty of the paper lies in modeling the effects of tax decentralization on the level of differentiation of regional tax revenues according to the latest available tax and budget reporting data for 2019–2022. As a result, it was shown that an increase in regional shares for personal income tax, certain components of the mineral extraction tax, water tax and fees for the use of water biological resources up to 100% will not lead to a significant increase in inter-regional differentiation of tax revenues. The prospects of the study are to take into account the impact of the structural transformation of the economy on the territorial distribution of tax bases and the level of taxation, as well as to detail the calculations for personal income tax and mineral extraction tax as new data are accumulated.

p. 104-121

Authors: M.Yu. Malkina, R.V. Balakin

The paper examines the relationship between financial and industrial stresses in the Russian economy in 2006–2019, mediated by the monetary policy of the state. Stress indices are constructed on the basi of a number of financial market and industrial sector indicators of the Russian economy. These variables are aggregated using the principal component analysis. Stress indices are calculated as the moving difference between the standard deviation and the mean value of the first principal component. The graphical and correlation analysis confirms that industrial stress in the Russian economy grows during financial crises, accompanied by an increase in credit interest rates (including the key rate) and the scale of refinancing of credit institutions by the Bank of Russia. Based on the construction of ARDL models, we obtained convincing evidence of the positive impact of both a short-term increase in the key interest rate and a longer increase in the scale of refinancing of credit institutions by the Bank of Russia on the reduction of financial and industrial stresses in the Russian economy, which, however, appears in different time intervals. We concluded that the combined management of industrial and financial stresses, taking into account their interaction and sensitivity to different instruments, requires the search for the optimal combination of monetary regulation methods. The results obtained may be useful in conducting a prudent monetary policy in periods of financial instability.

p. 8-26

Authors: M.E. Kosov, A.Yu. Chalova, R.G. Akhmadeev, E.V. Golubtsova

The article examines the modern concept of the state fiscal policy in Russia and the possibilities of its implementation through the federal budget in the face of new global challenges. To this end, the authors assessed the resource base of the federal budget of the Russian Federation, as well as the adequacy of measures of fiscal regulation of the current economic situation. In this regard, the authors evaluated the feasibility of the initial macroeconomic indicators underlying the parameters of the federal budget for 2023–2025, primarily its revenues, and the risks of their possible change. The authors associate the key risks of failure to achieve the stated goals of the budget and tax policy for the period 2023–2025 with a sharp reduction in the resource base of the federal budget, especially its oil and gas revenues in the context of worsening geopolitical tensions and increasing sanctions pressure on the Russian Federation. The study focuses on the justification of approaches to minimize the negative consequences of external shocks both for the subjects of the Russian economy and for public finances. In the course of the study, the authors used the methods of statistical data processing, factor modeling, regression analysis and expert evaluation. The scientific novelty of the study lies in the assessment of the impact of new global challenges on the balance of the Russian federal budget and substantiation of approaches to transform fiscal regulation measures in response to these challenges. The practical significance of the study lies in the possibility of using its results in the development of state fiscal policy in the medium term under the conditions of dramatic changes in the scenario conditions of formation of the federal budget.

p. 47-58

Authors: A.V. Maslov, K.V. Shvandar

In 2023, digital ruble is expected to appear in Russia. It is planned to allow for delay-free settlement of transactions with digital financial assets, automation of the use of smart contracts, and tracking of budget calculations. The Ministry of Finance plans to use the Russian digital currency in budget settlements. The first phase of the experiment to use a digital ruble has already involved a number of banks that are testing the opening of digital wallets on the Bank of Russia platform: deposits, transfers between citizens, as well as payments for goods and services. However, the question remains whether the digital ruble in today's environment will help solve the most important task — to facilitate crossborder payments. While the stage of development and testing is underway, it is necessary to pay particular attention to the issues of risk management, system stability, the peculiarities of interaction with other forms of fiat money, and to ensure the use of digital ruble in cross-border settlements. This article discusses test projects which are aimed at studying the functioning of the main channels of digital transactions, identification of problem areas and improvement of modern technologies in the field of cross-border payments. The purpose of this article is not an in-depth analysis of the results of any particular project, but a brief description of a number of projects to illustrate the activities of central banks of different countries in this area. Nor is it intended to compare these projects and draw conclusions about their results. An example of a more thorough study of some projects in order to use existing experience for new projects is the Report of the National Bank of Kazakhstan “Digital Tenge Project” (2021). All these projects are usually initiated by central banks, as well as international organizations and global financial market participants actively involved in international payment relations. The study of the results achieved during the testing of the projects give us an understanding of how settlements in CBDCs, including cross-border ones, may develop in the near future.

p. 74-89

Authors: S.I. Chuzhmarova, A.I. Chuzhmarov

The relevance of the research topic is due to the need to solve the problems of fiscal support for investment in the context of increasing environmental and climate risks that push countries to form the fiscal policy under the influence of the climate agenda, capable of ensuring the financial interests of governments and investors. The main objective of the article is to characterize the processes of transformation of national fiscal policy under the influence of the global climate agenda and tax incentives for investments in green technologies. The authors analyze the sources of investment financing mobilized by developed countries, the main of which are carbon taxes and energy taxes. Changes in the tax policy of the Russian Federation aimed at stimulating the best available technologies and R&D are exposed. The following conclusions are made. Developed countries are actively implementing fiscal measures to support investment in green technologies; the topic of tax transformation has moved from a discussion format to the plane of practical application, although not always successful. Today countries introduce new incentives, use preferential environmental taxation of innovative activities of the energy-intensive sector and voluntary tax agreements of authorities with investment companies, form ratings based on unified comparable indicators. The Russian Federation lags behind developed countries in mobilizing financial resources for green economic growth and in the development of fiscal tools that have proven effective. The problem today is tax regulation of technological development, which covers investment incentives and disincentives to environmental pollution. The next promising action could be the formation of a financial basis for green economic growth, investment in green technology.

p. 103-115

Authors: Yu.A. Spletukhov

The article discusses issues related to the implementation of environmental insurance. Its purpose is to consider a number of problems, the solution of which can contribute to increasing its role in the compensation of losses caused by environmental pollution. To this end, it is proposed to expand the circle of legal entities obliged to provide financial guarantees of compensation for such losses and to use environmental insurance as one of the mechanisms of such guarantees. The effectiveness of guarantees provided by concluding insurance contracts can be ensured by regulating its conditions in a separate regulatory act. In turn, the preparation of the latter requires consideration of some aspects related to the mechanism of conducting environmental insurance. The article, in particular, characterizes the types of environmental pollution and, on this basis, draws conclusions about the possibility, expediency and specificity of insurance in relation to each of them. The insured event in environmental insurance contracts, according to the author, should be the consequences of accidental, sudden and unintentional pollution, i.e., those caused by an accident, disaster or other emergency events of man-made or natural nature. Another problem considered in the article is related to the range of losses that should be included in the scope of insurers’ liability under the insurance contracts concluded in order to provide financial guarantees of compensation for damage caused by environmental pollution. According to the author it should include losses caused by the insured to other legal entities and individuals in the form of damage to natural objects and associated with the implementation of measures aimed at reducing the damage caused by the insured event. A significant place in the article is given to the peculiarities of assessment of damage to be compensated by insurance companies. First of all, it concerns how to calculate the losses caused by damage directly to the natural environment. The results obtained in this part of the article include, in particular, the conclusion that when choosing a method of assessment of such damage one should mainly take into account the amount of costs for environmental restoration.

p. 8-25

Authors: Boris I. Alekhin

In Russia inflation, as measured by the consumer price index (CPI), varies greatly from region to region. This study aims to find an answer to the following question: does there exist a long-term, equilibrium relationship between these differences and interregional differences in the cost of production, delivery and sale of domestic goods and the cost of imported goods? This research question stems from the markup theory of inflation proposed by G. Ackley, who assumed that inflation is a markup on the cost of labor and materials and the cost of living imposed, respectively, by firms and workers to protect profits and wages. Our empirical model of regional CPI includes the unit labor cost, the cost of freight and the cost of imported goods (all in index form). Econometrically, the model is an error-correction model derived from the ARDL model. The pooled mean group estimator is used to estimate the model’s parameters for a panel of 80 regions for the years 2000–2020. Our results do not reject the hypothesis of long-run homogeneity. For a given level of inflation, an increase in unit labor costs would cause prices to adjust completely in the long run, leaving the markup unchanged. Although Ackley’s theory calls for controlling the markup with the usual instruments of monetary and fiscal policies, it finds them inadequate and allows to conclude that regional authorities are able to contain price increases through industrial policy.

p. 45-57

Authors: Vladimir V. Vagin, Valeriya A. Paksivatkina

The article highlights the experience of civic participation in state and municipal management and financial aspects of civic self-organization in different countries of the world. The main forms of cofinancing projects by the population or collecting interest-free loans through civil mutual assistance are determined. Russian practices of financial participation of citizens in the implementation of projects of common interest are identified: co-financing of initiative budgeting projects, practices of self-taxation of citizens, co-financing of projects in the implementation of certain state programs and national projects, as well as co-financing of projects on crowdfunding platforms. Based on the analysis and review of scientific literature, the conclusion was made about the need to define and describe a new phenomenon in the field of public finance — "civil finance", which refers to financial resources and relations between citizens themselves and between citizens and state institutions in the process of implementing management decisions that affect the interests of urban and rural residents.

p. 74-94

Authors: Maria A. Moiseeva, Tatiana V. Kulakova

The existing methods of selecting a contractor for projects in the road sector in the Russian system of procurement do not fully take into account his business reputation and his previous experience, which negatively affects the efficiency of public procurement. Based on the analysis of international literature, it is proposed to assess the level of qualification of road builders by using a mathematical model of the complex indicator of their experience. The key idea of the proposed approach is to develop an integral indicator that characterizes the previous experience of contractors in performing a certain type of work. It is assumed that this indicator will be calculated automatically on the basis of data from the Unified Information System in Procurement. The proposed changes will improve the efficiency of the procurement system and ensure that contractors obtain the competencies necessary for high-quality and timely implementation of the relevant road works.

p. 116-133

Authors: Anna V. Tikhonova

The article discusses the basics of building a system of tax incentives for investments in human capital, capable of ensuring economic growth of the Russian Federation. The relevance of this issue is explained by three circumstances: first, investment in human capital is a key tool for protecting workers from the adverse effects of automation; second, human capital accumulation is closely correlated with income inequality and poverty levels; third, it is a key factor in stimulating rapid economic growth. The purpose of the study is to work out directions of development of tax incentives for investments in human capital on the basis of review and systematization of domestic and foreign literature. In accordance with the goal, the following tasks are defined: to identify areas of taxation influence on human capital formation; to formulate the principles of tax stimulation of investments in human capital; to characterize the tax instruments stimulating growth of investments in human capital; to highlight the state approaches to tax stimulation of investments in human capital of individuals. The scientific literature in the field of human capital development and tools for its regulation was analyzed, and the use of tax incentives was substantiated. The principles of tax stimulation of investments in human capital are formulated and described: the principle of risk minimization, the principle of multidirectionality by subjects of stimulation, the principle of differentiation by types and forms of human capital, and the principle of systemic measures of state support. The study presents three groups of tax incentives focused on the identified areas of impact and taking into account the formulated principles of stimulating investments in human capital.

p. 8-24

Authors: Michael V. Alexeev, Andrey V. Korytin, Elena V. Melkova

Recent changes in the Russian tax legislation aimed at weakening the tax powers of the federal subjects in relation to profit tax open the question of a reasonable degree of limitation of the fiscal autonomy of Russian regions, as well as the regulation of regional tax competition. This article discusses the peculiarities of regulation of domestic tax competition in Canada and the United States on the basis of an analysis of the provisions of the tax legislation related to the fiscal powers of regional jurisdictions (provinces, states). The article focuses on approaches to limiting harmful tax practices that affect the economy or budget revenues of other regions. Empirical studies confirm the existence of negative effects of domestic tax competition, as well as the relevance of measures to restrict it. The considered countries make efforts to limit domestic tax competition both at the level of interregional agreements and at the level of central authorities. However, practice shows that it is difficult to ensure actual implementation of agreements at the regional level, so regulation by the central government is of key importance. Based on this result, recommendations are given for taking measures against harmful tax competition between the regions of Russia.

p. 44-58

Authors: Olga I. Timofeeva

At the beginning of the 21st century, the issues of openness (transparency) of budgets of public-legal entities became especially relevant. This is due to technological changes (the advent of the Internet) and a common form of political participation in modern states (representative democracy). The task of measuring budget openness is also topical. Currently, there is no single solution for it. The article presents the methodology and results of measuring the openness of budget data in the constituent entities of the Russian Federation. The measurement of the budget openness of the regions is carried out on the basis of a special methodology. The article presents its main characteristics and features, as well as the results of budget openness assessment of all the subjects of the Russian Federation for the period from 2013 to 2021. The methodology of assessing the budget openness of Russian regions uses innovations that allow obtaining reliable and high-quality results. The evaluation system works as an incentive mechanism to increase the openness of budget data. During the measurement period, the openness of regional budgets has increased significantly. At this stage, not all aspects of budget openness can be measured. It is necessary to improve the methodology and technology of measurement, to expand the coverage of areas and to improve the quality of the assessment.

p. 74-90

Authors: Daria S. Leonteva

This study investigates an alternative approach to estimating the probability of default. The introduction of credit spreads as market measures of default into an accounting-based model attempts to enhance the predictive power of classical approach models which analyze only balance sheet data. This paper identifies which of the two market measures of credit spread — the Z-spread or the I-spread — has an advantage in the context of robustness of the bankruptcy prediction models. Using two techniques — logistic regression and a gradient boosting machine approach, as well as a sample of annual series of 80 financial ratios for 385 U.S. listed companies which issue corporate bonds — evidence is obtained that the I-spread has higher predictive power in both techniques. The better performance of the I-spread can be explained by the fact that the accuracy of the Z-spread calculation can be misleading because different methods of interpolation of the yield curve are used. In addition, the predictive power of the chosen techniques is also compared. The up-to-date gradient boosting machine framework performs better on the test sample. These findings may encourage managers to implement additional market characteristics in the analysis and apply modern techniques rather than the classic ones — logistic regressions and multiple discriminant analyses models — to predict inconsistency in corporate performance.

p. 111-123

Authors: Anton V. Navoy

The article focuses on the evolution of the global financial architecture in the context of geopolitical challenges. It introduces the conceptual apparatus of the global financial architecture (GFA) in conjunction with the structure of the global financial system. It then substantiates the thesis of GFA structure transformation towards establishing a parallel control circuit — informal institutions (forums) acting in close coordination with international financial institutions with broad international legal competence and implementing “soft” regulation of GFA on the basis of international standards and codes. The position of the Russian Federation in GFA is identified, and a conclusion about Russia’s secondary position in MFA institutions is made. The direction of transformations of Russia’s role in GFA are outlined: coordination of activities with other large developing economies; proactive position in the discussion of codes and standards, renewal of discussion on the formation of an international payment system independent of the reserve currency issuers.