In the system of public finances, the main place is occupied by the budget, which is used by the government to redistribute national income, as well as to regulate and stimulate economic processes.
Budget (from French. “boujette” – a leather bag, bag) is a fund of financial resources, which exists in the form of a balance of monetary income and expenditures of the state, republic, state, region, district, city, individual organization or households and is compiled for a certain period of time. The state budget provides complete information about the finances of the state, its activities, the directions of domestic and foreign policy. Therefore, it is considered as the main financial plan of the country, the centralized fund of financial resources of the state, an instrument of state regulation, and finally, as a law that is mandatory for the participants in budget relations. The totality of the organizational structures included in the state budget forms the budget system.
The content and structure of the budget system depend on a number of objective and subjective factors. Among the objective factors, the prevailing form of ownership, the order of distribution of the gross product, the natural, economic, social and national characteristics of the country are distinguished. Among the subjective factors are the government’s policy, development priorities, the external economic situation, and the state structure.
In countries that have a unitary structure (France, Great Britain, Belarus), the budget system has a two-tier structure – state and local budgets. In countries with a federal state structure (usa, Germany, Switzerland, Russian Federation) there are intermediate links – the budgets of states, lands, cantons, subjects of the federation, etc. Such a budgetary structure is achieved due to the division of sources of revenue generation of all types of budgets, including the distribution of tax revenues among the subjects in various directions: between the center and the territories, between the authorities. This phenomenon is called fiscal federalism. It involves the interaction of authorities at various levels in order to form, appropriate, distribute and use the monetary resources of society.
Through the budget system, the functions of the budget are implemented: distributive and control.
The distributive function involves the concentration of funds in the state through various channels of receipt and their use to fulfill state goals and functions. In some countries, this function is performed by the State Treasury through its regional bodies.
The control function is manifested in the conduct of control measures over the process of formation and use of funds in various structural units of the economy. It is carried out by tax inspectorates and tax police, state treasuries, the Central (National) Bank and other bodies.
The budget system is based on the following principles:
unity, meaning that the state should have only one consolidating budget of the country, combining all revenues and expenditures. This is ensured by the unity of the legal framework, the use of a single budget classification, the forms of documents, the coordination of the budget process, the unified tax and monetary systems; completeness, achieved by reflecting all sources of income and directions of expenditures at each level of the budget system; reality, which means that revenues reflect the sources of income in the amounts corresponding to the forecast for the development of the economy, and in expenditures – the directions of financing, which are justified by forecast indicators; publicity, which implies that draft budgets are communicated to the public through media coverage.
The leading place in the budget structure of each country belongs to the central or state budget, which forms a centralized fund of monetary resources of the government for the maintenance of the state apparatus, the armed forces, health, education, and the payment of social benefits. The budget is a powerful lever of state regulation of the economy, impact on the economic situation, implementation of measures to stabilize it. The impact of the state on the economy occurs through financing, issuing subsidies, transfers, etc.
The budget of a modern state is a complex, multifaceted tool that reflects a compromise in the correlation of socio-economic interests of various groups and parties. It is a compromise between owners and employees, on issues of taxation, income and wages, on social spending.
With the help of the budget, the state carries out a combination of centralized and local interests of the regions through the distribution of taxes, budget subsidies, transfers. Through it, depending on the specifics of the state, from 20 to 60% of the national income is redistributed. As an economic document, this budget reflects the political and social dynamics of society.
Local budgets are the budgets of states, lands, subjects of the federation, regions, districts. Under the influence of the complication of production, the growth of NTP in developed market countries, a tendency is developing to increase and strengthen the influence of local authorities. The scale and volume of the regional economy are growing, interterritorial ties and the functions of local authorities are expanding and becoming more complicated. All this strengthens the importance, authority and proportion of local budgets. In federal states, they account for 40 to 50% of all budgetary resources, while in unitary states no more than 30%.
The central government budget and local budgets are closely interrelated, both in terms of sources of funds and their expenditure. In the main, they jointly solve the political, economic and social goals of society on the principle of compromise of the interests of the main groups both in politics and in the economy. The bearers of these interests are ministries, political parties, financial and industrial groups, monopolies, unions of entrepreneurs, trade unions of industries, etc.
This compromise is sometimes achieved in an acute political and economic struggle through the redistribution of taxes, budget subsidies, the distribution of state orders, etc. In this struggle, the distribution and redistribution of monetary resources within the framework of a single state budget is formed.
Thus, the state consolidated budget is not only the budget of the central (republican, federal) government, but also the totality of budgets of all levels of state and administrative-territorial authorities (states, provinces, subjects of the federation, lands, regions, districts).
But at the same time, various extra-budgetary funds can also be attributed to the budget, which are an integral part of state financial resources that have a specific purpose. By their quantitative composition, they are not included in the budget, i.e. they are not part of the budgets of all levels and are not subject to withdrawal. But according to the principle of distribution and use, they are equivalent to state budget expenditures. They are at the disposal of central and local authorities, concentrating in certain trust funds. These are pension, extra-budgetary and other funds that are created at the expense of special taxes, deductions of enterprises, loans and subsidies from the budget. Their number is constantly increasing with the complexity of economic and social ties. So, within the framework of the US federal budget, there are more than 800 such funds. In the transition economy of Belarus, their number is small, but the role is significant. Through them, the state smoothes out the severity of the budget deficit, assists in the development of individual industries, regions, stimulates investment processes in the regions and districts.
Most state funds are formed for the maintenance and financing of production and social infrastructure: highways, airports, hydroelectric power plants, reforestation plantations, water protection, etc. The largest funds are social insurance funds: pensions, sickness benefits, unemployment, retraining of personnel, etc.
Thus, extra-budgetary funds expand the possibility of state regulation and intervention in the economy, bypassing the budget and parliamentary control.
In any public entity, the budget structure is allocated in terms of revenues and expenditures. It should be noted that, depending on the criteria used, several budget classifications of expenses and incomes are distinguished.
Among the classical groupings of expenditures, departmental is distinguished, where expenses are distributed depending on ministries and departments; subject – in accordance with the types of institutions; economic, reflecting the costs of the intended purpose (capital investments, wages, etc.); mixed, reflecting the expenditures distributed by ministries, and within the ministries – by subjects.
In the target grouping, expenditures are broken down according to national, political, economic and social programmes.
In the classification by functional characteristics, expenses are divided into social, employment, health, transport and communications, internal affairs, defense. They, in turn, are divided into categories of costs: wages, current expenses, etc.
Income is classified by source (form of payment, subject, object, industry, etc.), by type of income (taxes from state-owned enterprises, etc.), by method of collection (taxes and fines, service fees and voluntary contributions), by urgency (irrevocable, temporary).
According to the form, methods of withdrawal and content, all income is divided into tax and non-tax.
It should be noted that the structure of the state budget in each country has its own characteristics. They are determined not only by national traditions, the organization of education and health care, but mainly by the nature of the administrative system, the structural features of the economy, the development of defense industries, the size of the army, etc.
The expenditure part of the budget characterizes the direction and goals of budget allocations for the development and regulation of economic processes. They are always targeted and usually irrevocable. The irrevocable submission of public funds from the budget for targeted development is called budget financing. This mode of spending financial resources differs from bank lending, which, as a rule, assumes the repayable nature of the loan. However, the irrevocability of the provision of financial resources from the budget does not mean arbitrariness in their use. Whenever financing is applied, the state develops the procedure and conditions for the use of money to target and ensure overall economic growth and improve the lives of the population.
What is the nature and direction of budget expenditures? A significant place among them falls on the so-called social articles: education, health care, social benefits. They are designed to mitigate social differentiation, provide access to qualifications, decent medical care, guaranteed pension provision. These expenses contribute to the development of human capital, advanced training of the employee, strengthening his health. In the conditions of modern scientific and technological development, the role of human capital is increasing, which requires a new approach to the employee. The rapid pace of NTP increases the requirements for the quality of the workforce, its professional preparedness, physical endurance. Ultimately, the participation of a healthy population in real production ensures the growth of gross domestic product and national income.
Spending on maintaining the conjuncture and economic growth through subsidies and investments have an impact on increasing the rate of accumulation, accelerating the pace of development of industries and industries. The state acts as a catalyst for the development of scientific and technological progress, innovative technologies, increasing the competitiveness of national products in foreign markets.
In many countries, expenditures on the development of agricultural production, changes in its social status and role in providing the economy with raw materials and food are of particular importance. The nature of this grant varies. In developed countries, such as the United States, the state pays bonuses to farmers to reduce the production of grain and some other types of agricultural products. In the transition economy of Belarus, agrarian subsidies of the state are aimed at supporting agriculture in general and farms, in particular, at their technical equipment and protection.
Budget subsidies to the agricultural sector always have a social, political and economic orientation. And the point is not only that the agricultural sector on average provides 20-25% of annual GDP growth, but also that society is interested in stabilizing this sector of the economy, which has a risky character, a significant share in the overall structure of the economy.
A significant place in budget expenditures is occupied by expenditures on weapons, material support for foreign policy relations and maintenance of the management apparatus.
A certain place in the expenditure items of the budget falls on expenditures on servicing the internal and external public debt, defense, purchase of weapons and military construction. The size of these expenditures significantly affects the scale of demand and the amount of investment, as well as the sectoral and regional structure of the economy, have a direct impact on the national competitiveness of products in world markets.
Budget expenditures on export lending, insurance of export credits and foreign investment, imported and exported capital stimulate exports for the long term, optimize the balance of payments of the country, open up the possibility of developing new foreign markets, contribute to increasing the authority and strengthening of the national currency.
The state uses part of the costs to ensure the supply of foreign goods to the domestic market.
State budget revenues of up to 85% are formed at the expense of tax revenues. Significant revenues come from the privatization of property, etc.
In accordance with the Law of the Republic of Belarus “On the Budget System of the Republic of Belarus” of 15 July 1998, the budget system includes as independent parts the republican and local (village council, district, region, etc.) budgets, the totality of which forms the consolidated budget of the republic. The budget is managed by the Ministry of Finance, regional, district departments of executive committees. Cash execution of the consolidated (state) budget is carried out by the National Bank of the Republic or on its behalf by other parts of the banking system. Approval of the republican budget is carried out by the Parliament of the Republic of Belarus, local budgets – by the relevant Councils of Deputies.
For example, the republican budget for 2001 was approved for revenues in the amount of 3223 billion rubles, for expenditures 3471 billion rubles, i.e. the excess of expenditures over revenues was provided in the amount of 248 billion rubles. (or 1.5% of GDP). The main revenue items: value added tax – 33%, income tax – 19.5%, excise taxes – 12.2%, income tax – 10.9%, i.e. in general, the revenue side of the budget consisted of 76% of these taxes. The main expenditure items included: purchases of goods and services – 40%, subsidies and current transfers – 33%, capital expenditures – 24%, interest payment – 3%. The consolidated budget in 2001 was expected to be 5699 billion rubles, including revenues to the republican budget – 3223 billion rubles, and to local – 2471 billion rubles.