Budget classification of expenditures

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

The budget of the Russian Federation is a complex set of various income and expenditure items. Its effective execution involves a competent classification of sources of revenue, as well as areas of costs that are present in the state financial system. The specifics of Russia's political structure presupposes the formation of a stable structured model for attributing state budget revenues and expenditures to certain categories. Do the Russian authorities have such a resource?

Budget Classification Overview

Definitely yes. Otherwise, the functioning of the national economy would be impossible. The classification of expenditures, incomes and other parameters of the budget occupies an important place in the system of state economic planning. This mechanism involves accounting, systematization and analysis of information related to the execution of articles of the state budget. Based on this information, the effectiveness of the state policy in the relevant direction can subsequently be assessed, as well as the identification of possible mechanisms for its optimization.

Federal standards

Formation of general principles for classifying budget revenues and expenditures inRussia is built at the federal level through the issuance of relevant regulations, and subsequently delegated to the regions and municipalities. The fact that the development of standards and norms, through which the allocation of items of revenue and expenses of the state budget to one category or another, is carried out precisely at the federal level is the most important factor in the stability of the national economy, and in many respects also the political system.

The budgetary classification of expenses and incomes involves grouping the relevant items according to the degree of similarity of sources of income and channels for investing funds in the treasury and is used both for the purpose of drawing up financial plans and in the process of their implementation. The key task of the state in this case is to ensure the comparability of certain indicators in the budgets of different levels - federal, regional, municipal.

Structure of budget classification in RF

On the basis of what principles is the budgetary classification of expenditures carried out in Russia? First of all, it is necessary to single out 2 main mechanisms for its implementation.

• First, there is the income classification. It involves the grouping of budget revenue at all levels in relation to the sources that form it, and in accordance with the provisions of the regulatory legislation. Categories of income are determined by articles that combine certain sources of revenue on a common basis. These may be, for example, customs fees.
• Secondly, this is the classification of budget expenditures. It is also a grouping of costs,distributed across different levels of the public finance system. The classification of expenses reflects the direction of cash flows in specific areas in order to solve the key tasks facing the state - the development of the economy and improving the welfare of citizens.

The budget classification within the framework of the Russian model involves the assignment of revenue and costs to sections, subsections, as well as target articles of the state budget, which reflect the direction of cash flows in the area of solving specific types of tasks facing the state, and involve the implementation of certain economic activities.

Classification of expenditures and revenues of the budget of the Russian Federation can also be carried out on economic grounds. This mechanism involves the grouping of various articles based on their economic content. As a rule, it is supposed to allocate current and capital costs. Also, the economic classification of income and expenses involves the subsequent preparation of estimates for specific budgetary organizations.

Departmental classification

The most important component of the system of distribution of expenses within the framework of public funding is the activity of departments. What are they? First of all, the authorities themselves can determine certain mechanisms for assigning budget items to specific categories. Thus, departmental classification of expenditures of the state financing system is practiced. It is a grouping of cost items at the levelbudgetary systems of subjects of the Russian Federation. The main task of the authorities involved in this area of work is to distribute budgetary resources among the managers.

Departmental classification of expenditure items most often acts as a mechanism for the allocation of appropriate appropriations. The criteria here are the same as those noted by us above - the attribution of costs to certain sections, subsections or target articles (which, in turn, can be further classified into sub-items and other elements of financial support for the activities of authorities and institutions). As for the managers of budgetary funds at the level of regions of the Russian Federation, as well as entities in a similar status, engaged in work at the level of municipalities, their lists are approved by executive authorities or competent local governments.

Relevance of classification

Classification of revenues and expenditures of the state budget of the Russian Federation is of great importance. The effectiveness of its implementation directly affects the quality of the functioning of the state financial system of Russia. The specifics of the budget policy of the Russian Federation is largely determined by the peculiarities of the structure of public administration, the characteristics of the national model of the federal structure of our country.

Therefore, it is extremely important from the point of view of maintaining the integrity and stability of the political system to have a structured model for the classification and distribution of revenues and budget costs. The principles of its construction should be understandable and open both for federal structures,making key decisions in the field of financial management, and for regional and municipal authorities.

The classification considered by us, according to experts, in general, is built quite logically. The items of income and expenditure provided for by the Russian budget system, which is very important, are the same for all levels of public finance management. It makes sense to consider this aspect in more detail.

Unity of the budget system

So, the most important feature that characterizes the classification of budget revenues and expenditures in the Russian model is the unity of approaches and criteria for classifying them in one category or another at the federal, regional and local levels. Therefore, the key norms governing this mechanism are approved at the level of the highest authorities. As a rule, the relevant sources of law take on the character of a federal law. In turn, at the level of subjects of the Russian Federation or municipalities, the necessary detailing of regulatory norms can be carried out through the issuance of regional or local laws. The main thing at the same time is not to violate the general principles of budget classification, enshrined at the federal level.

We have studied the key theoretical principles by which the authorities in the Russian Federation carry out the assignment of items of expenditure and income of the state financial system to one category or another. We have seen that there are a number of basic approaches to building such a scheme, which are based on economic criteria, or, for example, methodsemployed by specific departments. Let us now consider a number of practical points that reflect how the classification of government expenditures and revenues is carried out. Let us study the very categories into which the revenues and costs of the state financial system are distributed in the Russian Federation. Let's start with income.

Income classification

Classification of budget revenue is expressed in the assignment of its sources to groups, subgroups and specific items.

Regarding groups, tax revenues can be distinguished. Among the key subgroups:

1. Taxes on goods, services, license and other fees. These include:

- VAT, - excises on products or raw materials that are produced in Russia or imported from abroad;

- federal, regional, and local fees related to the license category;

- tax on the purchase of foreign currency, as well as payment documents, which are expressed in foreign banknotes;

- UTII.

2. Property fees. These include taxes:

- on the property of enterprises;

- on the property of individuals;

- real estate;

- for inheritance or donation.

3. Charges for the use of natural resources located in the state. These include:

- payments for subsoil use;

- fee for the reproduction of the mineral resource base;

- tax on additional revenue from hydrocarbon production;

- tax on the rightuse of water resources, objects of the animal world;

- forest, water, environmental, land taxes.

4. Fees related to trade between the Russian Federation and other countries, with foreign economic transactions. These include:

- customs, state fees and duties;

- contributions to various funds owned by the state;

- fees for gambling, advertising;

- road and transport taxes.

Another largest group of budget revenue sources is non-tax revenues. Their structure contains the following main subgroups:

1. Property income from assets owned by the state, municipalities, or arising from certain commercial activities. These include:

- income from the use of assets owned by the state or municipalities;

- government-issued dividends;

- proceeds from leasing state property;

- interest received as a result of the formation of bank deposits at the expense of free budgetary funds, as well as those that arose as a result of the provision of loans within the country;

- income that appeared as a result of the provision of services or compensation for state costs;

- profit of the Central Bank of the Russian Federation;

- payments from state or municipal institutions;

- fishing quota fee for joint ventures and foreign organizations;

- other income from assets that are inproperty of the state or municipality.

2. Proceeds from the sale of assets owned by the state or local government. These can be:

- proceeds from the privatization of enterprises that were owned by the state;

- income arising from the sale of shares by public authorities;

- revenue generated as a result of transactions with residential real estate;

- income from the sale of production or non-production resources, transport, certain types of equipment;

- proceeds from the sale of confiscated or ownerless property, treasures and other assets that have become the property of the state or municipality.

- income from the sale of government stocks;

- proceeds from the sale of land resources, as well as intangible assets;

- receipts from non-state structures in the format of capital transfers;

- fees and charges related to the administrative category;

- fines, payment of damages;

- proceeds arising from foreign economic activities;

- other income classified as non-tax.

3. Free income. Their sources can be:

- budgets of different levels;

- public funds, organizations;

- supranational structures.

The classification may include funds that are transferred to trust funds. Actually, this type of institution can also have income.

4. Earnings of trust funds. In listsuch:

- road, environmental funds;

- structures related to the activities of the Russian customs system;

- crime fund;

- structures under the jurisdiction of the Federal Border Service, the Ministry of Atomic Energy;

- Fund for the reproduction of the mineral and raw material base.

These are the key categories in which Russian budget revenues are classified. As we defined above, their essence is aimed at maintaining the unity of the budget system of the Russian Federation, adapted to the specifics of the political structure of the country. But it will be no less important for us to study the principles by which state authorities also classify state budget expenditures.

Expense classification

So, we have considered the criteria for attributing income to certain categories, adopted in the Russian Federation. Let us now study what the functional classification of Russian budget expenditures is. Its main category is the section. There are many specific varieties. Thus, the modern classification of types of budget expenditures in the Russian Federation involves the allocation of the following list of sections:

- state and municipal government;

- judiciary;

- activities in the international arena;

- army;

- law enforcement structures;

- science;

- industry, energy and construction industries;

- activities in the field of agriculture, fishing;

- environmental protection;

- transport sector;

- connection,information technology;

- market infrastructure;

- Utilities;

- prevention and elimination of the consequences of emergencies;

- education;

- culture and art;

- media;

- he alth care, physical education;

- socially oriented policies;

- payments on external government loans;

- formation of state reserves;

- budget subsidies and other support measures;

- optimization of the composition of weapons, including within the framework of international agreements;

- training of the armed forces in terms of mobilization;

- financing the activities of trust funds;

- other types of expenses.

Let's now study what the economic classification of budget expenditures is. It assumes that costs fall into the following main categories:

1. current expenses. These include:

- payment of interest on loans;

- subsidies, transfers;

- expenses associated with the procedures for recognizing the rights to own assets abroad.

2. capital spending. These include:

- investments in fixed assets;

- formation of the state reserve;

- purchase of land, as well as intangible assets;

- transfers classified as capital.

3. Providing government loans. Among the activities of the corresponding type:

- provision of loans within the budget system;

-granting loans to foreign countries;

- return of credits.

It is possible to single out additional criteria for detailing costs. The economic classification of budget expenditures may involve the definition of the widest range of items where public finances can be directed.

Additional criteria for classifying income and expenses

So, for example, transfers to citizens are sometimes singled out as a separate category. They represent budgetary funds that are used to finance pensions, benefits, compensations, social payments, as well as scholarships - all those financial support measures that are provided for by federal, regional or municipal legislation.

Budget classification of budget expenditures may involve the allocation of additional subject articles based on current categories and sections. For example, if we are talking about subsidies - funds that are provided by the state in the required amounts to the regional or municipal budget, organization or citizen on the basis of shared financial security, then they can well be classified into various sub-items.

State standards in business

It is noteworthy that the functional classification of expenses, as well as various methods of classifying budget revenues into one category or another, which are used by state authorities, can be used in business in the form of fairly similar concepts. How is this possible?

The point isthat the classification of income and expenses of the organization may also imply their assignment to sections, subsections, subject items and additional categories. The methodology used by the authorities and business can be very similar in this sense.

For example, the classification of an organization's income and expenses may involve assigning them, if we talk about the former, to a specific area of origin, and if we talk about the latter, to a specific area of investment activities (for example, improving the production base, improving infrastructure, attracting new personnel, construction of new facilities, etc.). In turn, within the framework of each of the marked areas of the enterprise's activities, the costs will be specified.

The similarity of the principles by which the financial plan of the state is structured and the organization's expenses are classified, as well as income, can be expressed not only in the attribution of the company's revenue and costs to certain items (as well as in the case of the state budget), but also in building the principles of corporate relationships between organizations that, for example, are united in a holding. How can this be expressed?

Holding in this case can act as a kind of analogue of the federal budget. Enterprises that are part of its structure - "regional" financial systems. Subdivisions and branches - "municipal" budgets. Thus, the classification of expenses of an organization may involve, for example, the inclusion in their structure of transactions similar to subsidies and transfers, that isaimed at providing financial support to those structures of the holding that need it at a particular point in time.

Commercial activities can sometimes be very similar to those or other activities of public authorities. So, for example, with regard to loans and credits, the classification of enterprise expenses may also imply their inclusion in a separate category, similar to how the authorities do this when forming a budget.

Thus, the financial policy of government and business may have noticeable signs of similarity. The classification of enterprise expenses and incomes, as well as the structuring of state budget revenues and costs within certain categories, in some cases will be carried out according to uniform principles.