Tax revenues of local budgets: revenue analysis

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Dealing with territorial issues of development belongs to the powers of local authorities. The level of this power solves the current problems of citizens living on its territory, understands their pressing problems. Civil society, as a rule, evaluates the political successes or failures of the state as a whole based on the results of the work of local authorities. Strengthening the financial base of the regions by analyzing the tax and non-tax revenues of the local budget is an important task for local governments.

Basic language

The preparation, coordination, approval and use of the budgets of municipalities is carried out by local executive authorities.

Local budget revenues are financial resources transferred to the management of local authorities based on the current legislation of the country.

The procedure for the formation of local budgets is enshrined in the Budget Code of the Russian Federation. Tax revenues are the foundation of the budgets of the country's subjects.

The preparation and actual execution of local budgets are based on the following principles:

• Isolation.
• Financial support from the state.
• Openness in compiling and spending financial resources.

What is not tax revenues of local budgets, and what is, we will write below.

Sources of funds from municipal budgets

Receipt of own tax revenues of the local budget includes:

• Local fiscal charges.
• Deductions from taxes and fees of the regional and federal levels.
• State duty.

Compilation of tax revenues of the local budget is formed at the expense of deductions according to the standards to local budgets. They are enshrined in articles 61, 611, 612 of the Budget Code of Russia.

Exist, in addition to tax, and non-tax revenues of local budgets:

• Movement of funds provided from the local budgets of the subjects, other gratuitous receipts from the budgets of other subjects.
• Income from municipal property leased assets.
• Component of the financial result of unitary enterprises of municipal importance.
• Voluntary cash transfers.
• Loans between structures of different levels.

Local fees, state and federal tax revenueslevel, from fiscal fees provided for by certain fiscal regimes, as well as non-tax payments in the amount of income of the country's subjects. In other words, their own incomes are tax and non-tax payments transferred to the budgets of the subjects of our country.

Local fiscal payments

Taxes and fees at the local level are regulated by the executive authorities of local importance in accordance with the laws of the country. The share of tax revenues in local budgets is the main one. In accordance with paragraph four of article twelve of the Tax Code of the Russian Federation, when introducing a local fiscal levy, the legislative bodies of self-government at the local level prescribe the key points of taxation:

• bets;
• order and periods of making payments;
• reporting forms;
• fiscal incentives.

Other important elements of fiscal taxation are established by tax legislation. The list of local fiscal payments is currently as follows:

• Fiscal tax on citizens' incomes.
• Land tax.
• Registration fee for business entrepreneurs.
• Fiscal fee for advertising.

Fiscal tax on real estate of individuals

In all territories with local government of our state, the payment of a fiscal tax on property has been introduced. It refers to the tax revenues of local budgets. Moreover, in each subject, the payment of a fiscal tax on real estate of individualspersons is introduced by a separate legislative act adopted by the representative authority of the subject.

Transfer the fiscal fee to citizens who own residential properties (houses, summer cottages, apartments, rooms and townhouses), garages that are owned by citizens of the country. The size of the tax is regulated by the authorities of the subject of the country, responsible for the receipt of funds to local budgets from taxes and fees. Fiscal relief from property tax is provided:

• To the Heroes of Russia and the Soviet Union.
• To the participants of the Second World War.
• Disabled people of the first and second groups.
• For pensioners.

If a citizen en titled to a fiscal benefit owns simultaneously several objects subject to fiscal taxation, then the benefit applies to one of them. The tax income of the local budget on the example of the collection on the property of a citizen is formed as follows. For example, a retired citizen has two apartments and a dacha, then he is en titled to a fiscal benefit for one of the two apartments and a dacha. Other residential property is taxed in full. Fiscal relief cannot be obtained only in relation to:

• commercial property;
• unfinished construction.

To receive benefits for the current year, you must write to the tax office about the selected object of preferential taxation before November 1 of the current year. A citizen has the legal right to change his choice once a year.

Tax revenues of local budgets are formed from the tax onproperty of citizens. The rules for calculating and paying the fiscal fee on the property of citizens are enshrined in chapter thirty-two of the Tax Code of the Russian Federation. The provisions of the head are the same for all subjects of the country, but at the same time, regional authorities can establish features within the framework of the law. Municipal authorities can approve their tax rates. The main thing is that this value does not go beyond the limits established by chapter thirty-two. The rates may vary depending on the given conditions. In addition, regional authorities are allowed to increase, but not reduce, the amounts of fiscal deductions specified in the law and introduce, but not reduce, benefits. These rights allow local government territories to generate a small increase in tax revenues to local budgets. The size of fiscal rates and deductions can be clarified at the IFTS at the place of registration (residence). There is also a downside to this issue, the tax revenues of the local budget of Krasnodar in 2016, for example, were not fulfilled largely due to property deductions due to citizens living in this region of the country.

Citizens who own real estate objects pay property tax. Payers are also owners of residential buildings located on garden plots and vegetable gardens. The revenues of local budgets are generated by collection on property quite substantially.

The amount of tax on the property of citizens is calculated by the tax inspectorate responsible for the formation of budgets at the expense of fiscal fees. They send all citizens a notice demanding payment of the tax. Whereininspectors can present the amount payable for no more than the last three calendar years preceding the period when the notice of payment of the fiscal fee was sent. If the inspectors include in the notification tax for previous periods, the citizen has the right not to transfer funds to the state treasury. In life, it often happens that information about acquired real estate objects is not received by the inspection staff in a timely manner. Notifications are not sent to citizens. The fiscal fee is not paid, and the tax revenues of local budgets are significantly reduced because of this.

To resolve this problem three years ago, a new obligation was introduced for all citizens of the country. Now the owners of real estate must themselves submit data to the tax office about the objects of taxation by the tax collection of property. You need to do this only if, for the entire period of ownership of real estate, tax officials have not handed you a claim for payment of tax. In addition to the message, you must submit documents proving your ownership of the property. This must be done before the end of the calendar year following the past tax filing period. Beginning last year, citizens who fail to comply with the obligation prescribed by law will be fined twenty percent of the unpaid fiscal fee in respect of real estate hidden from inspectors.

The base is calculated for each object separately. In regions where the calculation of the fiscal fee has been introduced based on the value according to the cadastre, the tax base isthe value of the property according to the cadastre as of January 1. The cadastral value can be clarified in the multifunctional centers of the country. This information is provided to citizens free of charge. When calculating the amount of the fiscal fee, the cadastral value is reduced by the amount of the tax deduction.

How is the base of collection on property, which is the tax income of the local budget, calculated? Let's see the calculation. He will demonstrate how tax revenues of local budgets are formed, using an example. The cost of an immovable object, according to the cadastre, is four and a half million rubles, and the cost of a meter of real estate is ninety thousand rubles. Then the amount of the fiscal deduction will be equal to one million eight hundred thousand rubles, and the amount of the tax base will be two million seven hundred. Regional authorities can increase fiscal deductions without any restrictions, thereby regulating tax sources of local budget revenues. If, as a result, the amount of the property deduction turns out to be greater than the value of the property according to the cadastre, the tax base will become zero.

Land tax

Today, the tax on land (plots) is enshrined in fiscal legislation. Fiscal tax for land is paid by legal entities and individuals who own land plots by right:

• property;
• use on a permanent (perpetual) basis;
• inherited possessions.

The objects of fiscal taxation are land plots located within the boundaries of the municipalareas where the tax levy is in effect. The following sections are not subject to fiscal taxation:

• under the objects of culture of the peoples of our country;
• data for the special needs of the defense, security and customs structures of our state;
• within the fixed boundaries of the forest and water resources of our country.

Exempt from fiscal taxation:

• enterprises of the criminal, executive structure of the Ministry of Justice of the country;
• organizations engaged in public highways at the state level;
• associations of people according to religious views;
• organizations for people with disabilities in our country;
• organization of folk crafts of our state;
• citizens classified as indigenous to certain areas of the state.

The base for fiscal taxation is determined as the cost of the land cadastre in accordance with the legislation of the state. The base for fiscal taxation is reduced by a tax-free amount of ten thousand rubles per fee payer in the territory of one territory with local government:

• To the Heroes of the USSR and Russia;
• bearers of the Order of Glory;
• people with disabilities in their professional activities;
• disabled and veterans of the Second World War.

The rates of fiscal fees are established by the administrative documents of the executive bodies of the municipalities and cannot be higher than the figures indicated in them:

• three tenthspercent in relation to plots of land classified as agricultural territories or to plots as part of zones of use for the national economy in settlements and used for the production of crops; occupied by residential buildings and engineering infrastructure facilities of the communal complex; provided for the subsidiary farming of citizens, gardening, horticulture or animal husbandry;
• one and a half percent for other land.

Entrepreneur registration fee

Payers are citizens who wish to engage in private business, not prohibited by the laws of our country, without creating a legal entity, for their official registration as business owners. These payments are included in the income of local budgets from taxes and fees.

Regional authorities of the subjects of the country set:

• maximum tax rate;
• list of payers eligible for fiscal benefits on collection.

Tax to local budgets also applies. At the same time, the maximum amount of his rate should not be higher than the minimum wage established by law. The amount of the fee for some payers within the established rate is determined by the relevant administration of the subject when considering an application for registration of a citizen as an entrepreneur. The amount of the fee, which, according to the Budget Code, is included in the tax revenues of local budgets, is credited to the relevantbudget at the place where the entrepreneur is registered.

Official registration of a citizen who wishes to engage in commercial activities is carried out by the relevant administration of the subject at the place of permanent registration of this individual. For registration, the future entrepreneur submits an application of the appropriate sample. Registration must be done no later than fifteen days from the date of submission of the document by the citizen. A citizen is issued a certificate of registration as a business owner for the period written in the application, after they submit a payment order for the transfer of funds towards the collection. The registration fee paid is non-refundable. It refers to the tax revenues of local budgets. A citizen may not be registered if he wants to engage in activities not provided for by law.

Advertising tax

Tax income from advertising activities makes a significant contribution among local taxes to local budget revenues. With such input data, it turns out that if fiscal taxation in this area were limited, a significant amount of funds would pass by the treasury of the country's subjects. This tax in the revenues of local budgets is a significant share. About one tenth of the budget. It is impossible to forget that local budget revenues are local taxes. After all, forgetting about it means reducing payments to public sector employees, pensioners.

Quite often there are situations in which companies are forced to pay tax on advertising included inthe composition of tax revenues of local budgets, but not as a direct fiscal fee for the promotion of goods and services, but as another fee (for example, for profit) in accordance with the legislation of our country or as a result of the company's advertising activities falling under the laws of other countries. The tax rate is five percent. This provides a regular, constant income for local budgets.

There are several ways to calculate the advertising tax. The choice of one of them depends on who carries out the advertising work:

• If a specialized company undertakes to carry out an advertising campaign of an enterprise, then the fiscal fee is deducted from the costs of this campaign. The local tax is transferred to the local budget revenues.
• If the company carries out the costs of promoting a product or service on its own, then in this case the costs of materials, depreciation of equipment and tools, wages of workers involved in the process, as well as all indirect costs are summed up, and information is transferred to the tax office about five percent of the total costs spent.

Payment of fiscal taxes for advertising to local budget revenues is made at the end of the reporting period. It is worth remembering that this must be no later than the twentieth day of the calendar month following the reporting period.

A document on advertising tax, which is one of the varieties of local taxes to budget revenues, is compiled and approved by each subject independently, however, there are two main federal legislative documents regardingit, which the law of the subject should not contradict: the Law of the Russian Federation "On Advertising" and the Tax Code of the Russian Federation.

There are a number of organizations exempt from paying taxes for advertising in our country. These include organizations engaged in political campaigning, individuals offering their non-commercial services to the population, rehabilitation centers and points of social adaptation, charitable organizations. Social advertising is exempt from local taxes in local budget revenues.

There is a clear list of things that are taxable during the campaign, as well as a list of non-taxable expenses. In advertising, the fee is subject to:

• purchase of services required for the production of promotional materials;
• purchasing materials to produce finished work yourself.

Materials that have an advertising purpose: stickers on vehicles, posters, information boards and banners, paper posters, other materials that inform about a product or service. Funds spent on coverage of services by any public person or organization are subject to a fiscal levy.

There are advertising costs that are not taxable:

• campaign fee;
• advertising sign with the name of the company, its contact details;
• money spent on alerting prospective clients of an upcoming campaign.

Any campaign advertising its activities should be aware of what objects are considered outdoor advertising, whatis subject to and what is not subject to taxation when promoting a service or goods. The dissemination of any information about your enterprise engaged in commercial work in order to expand the list of your clients is considered outdoor advertising. We list the main points that the data must meet in order for the company to be required to pay the fee:

• Audience capture. All objects where a citizen's gaze involuntarily lingers are considered advertisements.
• Creating interest in the target audience.
• Promotion of the company on the market.

If the objects correspond to at least one of the above points and the company is engaged in commercial work, then it is obliged to pay advertising tax to form local budget tax revenues.

Three years ago, a lot has changed in the taxation of advertising. The first thing that happened is that now not only the advertiser company, but also the advertising agency can transfer the advertising tax. The only condition is that this moment must be indicated in the partnership agreement, in such cases the advertiser company transfers, along with the payment for services, the amount that should eventually go to the tax office. Secondly, the untimely appearance of funds in the account is punishable by a fine, which means that you need to think about whether it is worth shifting the payment of taxes to the agency.

All of the above applies not only to tax revenues of local budgets of the Russian Federation in terms of large cities, which include the capital of our country and other cities, but also provinces.

Non-taxearnings

Everything that is not tax revenue of local budgets is considered non-tax revenue. These, according to article forty-one of the Civil Code of the Russian Federation, include:

• Cash receipts for the use of property owned by municipalities, after payment of taxes and fees in accordance with the current fiscal legislation.
• Cash receipts from commercial services provided by public sector institutions managed by local governments, after payment of taxes and fees approved by the current fiscal legislation.
• Funds received as a result of causing property damage to municipalities, and other financial means of involuntary withdrawal.
• Receipts in the form of cash assistance transferred from the budgets of other levels of the state budget system, except for loans and borrowings.
• Other non-tax income. Such financial receipts of the budgets of the local level are transferred at the expense of the part of the result of the financial work of municipal unitary enterprises, which remains after the payment of taxes and other obligatory payments to the budget. The size of that part of the profit coming to the local budget revenues is regulated by legislative acts of local self-government. Non-tax revenues of local budgets are formed at the expense of the part of the financial result of municipal unitary enterprises remaining after taxes. Their size is regulated by legislative documents of local governments.

Main typesnon-tax revenues of local budgets are specified in article seven of the legislative document on financial dogmas of local self-government. In accordance with this article, the following are included in the own revenues of local budgets:

• Financial proceeds from the privatization and sale of any property of territories with local government.
• At least ten percent of income from the privatization of state property located on the territory of municipalities, carried out in accordance with the state-level privatization program.
• Financial income from the lease of municipal property, including the lease of non-residential real estate, land plots. The budgets of municipal districts receive funds from state-owned land plots located in inter-settlement territories and intended for any construction purposes.
• Financial income from local cash lotteries.
• Money compensation to be transferred to local budgets. The budgets of municipal districts and the budgets of urban districts are subject to a contribution for the negative impact on the environment that surrounds us, according to the standard of forty percent.

Transfers and subsidies

Due to noticeably tangible adjustments to the structure and status of taxes, a decrease in their number, the redistribution of cash flows through transfers, subventions and subsidies is of great importance in the formation of budget revenues at all levels.

Interbudgetary transfers from the budgets of the country's subjects are transferredlocal budgets in this form:

• financial assistance to equalize the material capabilities of municipalities in settlements in solving problems of local significance of territories;
• financial assistance for material support of municipal districts to equalize the financial security of urban districts;
• subsidies for equity cash incentives for development investment programs for municipal infrastructure development for civil society;
• subsidies for the purpose of material support for the execution by local governments of certain powers of the state level.

Loans for up to a year can be provided to local authorities from the budget of a constituent entity of the country in the manner and on special conditions established by the laws of the constituent entities of our country.

Transfers from local budgets are also provided in the form:

• Material assistance from the levels of municipal districts to the levels of settlements in order to specialize in relation to subsidies from the fund of the regional level of monetary support of settlements equalization of material levels, local self-government bodies of settlements in the performance of their functions on local level management.
• Financial transfers to the budget of the subject of the country of subventions from the budgets of municipal settlements or districts in which in the reporting year the estimated tax revenues of local budgets (excluding tax revenues in the form of deductions according to standards) exceeded the threshold legalized for the subject of the country.
• Money transfers to the budget of the district of the municipal levelsubventions for solving problems of local importance of an intersubjective nature.

Results

To solve the problems of formation of tax revenues of local budgets, it is necessary to revise the process of calculating and transferring fiscal fees required to be paid in connection with the use of special tax regimes, and to increase the effectiveness of collecting their payment to the state treasury.