The problem of efficiency in the provision of benefits for value-added tax

Today, more than 40% of the consolidated budget of Russia is derived from the value added tax. In connection with such a substantial fiscal significance of this tax, any loss in its income can play a significant role in the state budget. At the same time, because the Russian economy today is focused mainly on indirect taxation, mainly in the form of VAT, there is a need to address the regulatory function of this type of tax. In particular, the likely need to reduce the rates of indirect taxes, whose negative impact on the manufacturer directly manifested - through the process of tax shifting in a crisis and indirectly - through too sharp decline in consumption. In the tendency to decrease the tax burden on producers through lower tax rates there is a need of neutralization cost of losses associated with such a decline.
One of the most promising areas of reform of the VAT, in our opinion, is a revision of the tax benefits of this tax. The fact is that most of the benefits of VAT, in contrast to the direct tax, is alleged in relation to taxpayers in nature. Providing tax concessions for some taxpayers, the budget shall reimburse losses due to others, purchasing goods (works, services), implementation of which is exempt from VAT or sales are exempt from paying it, assume the obligation to pay tax on their Value Added Tax added value created by enterprise-seller, the tax on the purchase of the seller of goods and services for their production needs, is included in cost of sales tax and VAT. In this case VAT is losing its economic sense, while ceasing to be neutral to manufacturers and purchasing a cascading effect. Actually the main reason for the inefficiency of the VAT exemptions is that any deviation from the common rules for the payment chain, the VAT refund scheme and distorts the work of the tax and change the direction of its impact on economic processes, and not always in the desired direction.
The use of a large number of tax benefits is also associated with increased costs the taxpayers to pay taxes associated with the necessity of separate accounting for taxable and tax-free transactions, as well as the costs of the state to collect taxes and control over the correctness of calculation and payment.
It should be emphasized that since the start of operation, the Russian VAT system has absorbed the maximum amount of benefits ever used in the world. Among them are recognized and the specific, unique to our system, many of them are so vaguely defined by law, it is likely that the possibility of impunity of the unjustified use of privilege.
According to reports, forecasting and analysis department of the Finance Committee of St. Petersburg in 1996, the amount of shortfall in the budget system in St. Petersburg in connection with the provision of benefits for VAT amounted to 3536 million rubles. or 62.7% of incoming tax and 38.5% of the amount of tax computed without regard to benefits in 1997 - 8206 million rubles. or 101.4% of the amount of incoming tax in the first half of 1999 - 7036 million rubles. or 126.5% of the amount of incoming tax. For comparison, the loss of benefits for income tax for the same period did not exceed 30% of the amount of incoming tax. No one other than the VAT tax state will not be so large losses of benefits, both in absolute and relative terms, and for the observed increase in the amount of VAT payers underpays using the facilities, are ridiculously small. In 1998-1999. VAT exemption enjoyed by the city of about 8% of the tax payers, with the loss of benefits from such a small group of economic agents significantly exceeded the amount of tax, resulting in the budget.
The main budget losses associated with the following types of benefits: exports (25.7% of the shortfalls resulting amount of tax); turnover of insurance and banking institutions (34.5%) operations associated with the circulation of currency, money and securities (28.5 %), medical services and products (17.5%).
Offer for the purity analysis of the benefits derived from the export turnover, turnover of insurance and banking institutions, turnover casinos and slot machines as they are in its economic content, as such benefits are not. Exports is taxed at zero rate in order to avoid double taxation and the VAT exemption of banks, insurance companies, casinos and slot machines due to the fact that they pay a higher rate of income tax. As a result, we filter the loss of benefits from the budget in the first half of 1999 to 3672 million rubles. That is, 66% of incoming tax to the budget, that still represents a fairly substantial number.
Based on the above consider it appropriate to reduce a number of benefits, including wearing an imaginary social orientation, to a minimum, especially taking into account that uses each of them less than 1% of taxpayers. This number of beneficiaries (again, that advantage may be to question the benefits) does not justify such enormous losses to the budget, along with littering violation of tax laws and the mechanism of VAT.
Using the experience of Western countries, we propose to replace a number of benefits of social orientation in the form of full tax exemption, in particular benefits, as specified in subparagraphs l, n, n, y, f. of paragraph 12 of the Regulations of the Russian Federation № 39 SOT, taxation at the reduced rate (10%). This measure will not only reduce the losses of the budget, but will make organizations that implement the above-mentioned goods, works and services subject to VAT, that is, give them the right to compensation for the amount of tax paid to suppliers, and eliminates the need to include these amounts in cost. Fully invited to abolish privileges established by the following subparagraphs of paragraph 12 of the Regulations of the Russian Federation № 39 SOT: c, d, s, m, c, x, x, h, w, w, w. Taken together, these measures could reduce the loss of VAT exemption up to 30-35% of the tax amount received. Thus, according to the first half of 1999 due to a reduction in benefits could be additionally received about 1,500 million rubles.
It is obvious that the abolition of privileges with a social orientation, will cause a wide public outcry, and therefore may be useful to introduce a system of direct subsidies to low-income strata of citizens (eg, differentiation of tariffs for housing, utilities, transportation, health and education services), together with more effective system of incentives through income taxation. In this situation it is important to understand that any VAT exemption, including social, associated with significant losses, not only for the budget, but also for society, and the elimination of most of them should make it possible to reduce the tax burden on the population by lowering tax rates . Unfortunately, the second part of the Tax Code, which comes into force on January 1, 2001, contains almost no progressive changes with respect to benefits under VAT. The list of benefits is approximately the same force up to now, only a small portion of them transferred to a levy at a zero rate. Thus, the question of reforming the concept of VAT in the direction of broadening the tax base by reducing exemptions remains unsolved.

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