The regions’ debts have exceeded their revenue
The debts of the Russian regions are mounting and becoming an issue of avid discussion in the Parliament as well as in the Government. On one hand, the federal administration is not liable for the regional debts pursuant to the Budget Code. On the other hand – the federal authorities are the main creditor of the regions.
Furthermore, the mounting debts threaten the fulfillment of the Presidential decrees on raising the salaries. Such raises are to be financed mainly by the regional treasuries. Therefore, the Ministry of Finances will have to not only call upon the regions to improve their financial discipline and increase the efficiency of the regional expenses, but also to find the means to ease the burden of the regions’ debts.
“RIA-Rating” has drawn up a rating of the regions by the level of debt burden according to the data provided by the Ministry of Finances. According to that rating, as of January 1st of 2013, the ratio of the total debt of the regions to their own revenue (excluding the amount of free federal assistance) in 2011 was of 26,1%. Expressed absolutely, it amounted to 1,355 trillion roubles, having increased by 15,6% during 2012. In 2011, the growth was less significant – 7%.
The lowest regional debt to own revenue ratio is in the Nenetsky Autonomous District – 0%, the highest – in Mordovia: 179%. The group of outsiders also includes the Republic of North Ossetia – Alania (108%), Vologda Region (92%), Ryazan Region (91%). Ten more regions with the debt amounting to more than 70% of their revenue are also in the top part of the list. There are 19 regions with 50% to 70%. It could have taken years for the regional debts to accrue. The Ministry of Finances has many times accused certain regions of irresponsible financial policy. However, the regions claim their specificity. For example, Nikolay Merkushin, former head of Mordovia and the current head of Samara Region, explains the huge debt claiming that agriculture had to be developed without subsidies. According to him, the agricultural produce in the republic grew eight times during the recent years.
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According to the rating of the regions by “RIA-Rating”, Mordovia has the highest debt – almost two times more than the budget revenue. It is followed, even if not very closely, by North Ossetia, Vologda Region and Ryazan Region, whose income almost equals their debt. 14 Russian regions have debts exceeding 70% of their revenue.
Those regions are in a complicated situation: on one hand, the Ministry finances makes (according to the Budget Code) all “persistent” debtors sign financial discipline agreements and systematically lower the debt, on the other hand – they also have no sources of funds to fulfil their obligations.
Mordovia could be the only exception, as it has managed to register the millionaire Gerard Depardieu in Saransk. But the tax law experts discourage: before charging the 13% of the Russian tax from the actor’s many millions of income, he needs to be made to live in Russia 183 days per year or hired to work in a Mordovian theater.
Advocate Maxim Rovinskiy, Head of Tax and Customs Law Practice of the Law Firm "YUST", points out: “Certainly, if the actor acts in a Russian film, or accepts, for example, a position in the State Russian Drama Theater of Mordovia, the taxes from his honoraries will be credited to the budget of that region of the Russian Federation”.
Unfortunately, G.Depardieu has expressed no such desire. And his potential earnings at a Mordovian stage would hardly resemble anything like his European and Hollywood fees. And those are beyond the Mordovian reach.
M.Rovinskiy explains: “Neither the Russian nationality nor the registration in Saransk make Mr. Depardieu a Russian resident, that is – those facts do not oblige him to pay tax in Mordovia from all his revenue all over the world”.
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