FOR INFORMATION: in 1995, GDP amounted to Rb1,659.2
As it can be seen, when comparing Table 2.1with Table 2.5, in 1995, the share of the mandatory tax withdrawals to GDPdecreased further on, from 34.9% to 31.1%. Thie Share of the State expendituresalso decreased, and amounted to 34.5% of GDP against 37.5% of GDP in 1994(reduction by 8%). In 1995, the State expenditures and loans minus repaymentsreached 39.2% of GDP (against 47.5% of GDP in 1994; hence, the reduction by17.5%). This reduction in the expenditures by 8 percentage points is formed bythe reductions by 1.7 percentage points in the expenditures on defense (by37%), by 0.4 percentage points of the expenditures on the law enforcementagencies (by 21%), by 0.4 percentage points of the expenditures on science(29%), by 2.6 percentage points of the expenditures on the social needs (by14%), by 2.3 percentage points of the expenditures on the national economy (by20%), and by 2 percentage points of the loans minus repayments (by 55%); at thesame time, other expenditures grew by 1.4 percentage points.
1996 Draft Budget
For the first time during the years of thereforms, the 1996 Budget was approved by the State Duma before the beginning ofthe new fiscal year. Despite certain delays against the projected terms, theGovernment submitted the relevant draft to the State Duma well in advance (on18 August 1995).
The Budget calculations supposed thecontinuation of the strict financial policy in 1996. The rates of growth of themoney supply were to amount to 20-25% during the year. Herewith, the initialforecasts stated that, due to the reduction of the money circulation rate, themonthly inflation was to be limited to 1% to 1.2%, or annual 10% to 15%.According to the calculations by the Ministry for economy, the nominal volumeof GDP was to amount to Rb2,100 trln, with its 1996’s actual volume growth by1%.
The Budget incomes were supposed to amountto 15.8% of GDP with the expenditures equaling 19.7% of GDP. The forecastsupposed deficit was assumed as 3.9% of GDP. The deficit financing was supposedby the external (1.5% of GDP) and domestic (2.4% of GDP) loans. The mainparameters of the draft Budget are shown in Table 2.9.
The program was realistic enough, though,the inflation rates (taking into account the 1995’s dynemics) wereunderestimated.
With the purpose to correct the Budget, theAgreement Commission was established; the results of its work served to makerelevant amendments to the draft Budget. The estimated inflation rate value wasincreased up to the monthly 1.9%, which can be considered a realistic value,based on the parameters of the draft monetary program for 1996 and the monetarypolicy effective in the second half of 1995. GDP value estimate was raised upto Rb2,300 trln.
On 15 November 1995, the StateDuma ‑ having haddiscussions with the Agreement Commission ‑ approved, in the first reading,the Law “On the Federal Budget for 1996”. The draft Law did not undergo anysignificant changes, if compared with the version submitted by the RussianGovernment. Due to the corrections made, and the amendments to the Tax Lawsapproved by the Commission, the draft Budget increased the incomes approved inthe first reading up to Rb347.2 trln (15.09% of GDP). The Budget expendituresof Rb435.37 trln (18.95% of GDP) were fixed based on the limit deficit value(3.85% of GDP). After this, the State Duma was to approve the itemization ofthe Federal Budget expenditures.
On 6 December 1995 the final version of theRussian 1996’s Budgetwas approved. If compared with the first version of the draft Law, theexpenditures on the social items, on the national economy, and on the defensewere increased; at the same time, the expenditures on the State administrationand the miscellaneous expenditures were reduced. On the whole, the approved1996 Budget has no significant differences with the draft Budget submitted tothe State Duma by the Government in August 1995. The Law has increased thevalue of the Budget incomes by Rb14.6 trln (0.6% of GDP): a significant shareof this sum is to be formed by the taxes on foreign trade and inflows from thetargeted Budget funds. The expenditures value was increased by Rb 21.3 trln(0.9% of GDP). More than a half of the above increase is formed by theexpenditures of the targeted Budget funds. Besides, the value of theexpenditures on the national economy grew significantly (by Rb7.9 trln). Theexpenditures on the social and defense programs were increased somehow, aswell. The Budget deficit value was increased by Rb6.7 trln (0.3% ofGDP).
Budget revenues.The Budget tax revenues amount to 82% (or 88% when taking into account thetargeted Budget funds) of its inflows. The profit tax (2.4% of GDP), the VAT(5.5% of GDP), the excise taxes (1.9% of GDP), and the export-import duties(1.6% of GDP) remain the main sources of the tax revenues to the FederalBudget. On the whole, the tax revenues to the Budget amount to 12.3% of GDP(compared with the 10.3% of GDP in 1995).
RF Draft Federal Budget for 1996
Executionof 1995 Budget
DraftBudget submitted to State Duma on 30 August 1995
DraftBudget approved in first reading
Lawpromulgated on 6 December 1995
Deviations:Law promulgated against draft Law
% of GDP
Tax revenues; ofthem:
Payments for use ofnatural resources
License duties onproduction and sale of alcoholic beverages
Tax on transactionswith securities
Taxes on foreigntrade and foreign economic transactions
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