No one is ready to be held accountable for changing the status quo. It is a systemic problem shared by Russia’s economic policy and its current politics – the 2011 budget address only serves to more clearly reflect it.
At first glance, the 2011 budget address looks like it has all the right words. However, its anodyne rhetoric will hardly alter the country’s economic life without political will. The address includes a conspicuous paucity of hard figures – every formula is evasively qualified and carefully worded. It mentions, for instance, that more reliable tax control measures must not obstruct the activity of honest taxpayers. The idea is all well and good and suits any budget address, but, in reality, we see those conditions worsening.
The next paragraph is about value-added taxes: honest taxpayers cannot get around it, but somehow dishonest players can. Government documents mention this issue every year.
The few figures cited in the address are decidedly vague and do not correspond to specific targets. Thus, it is proposed that the budget deficit be cut in half by 2013 as compared with 2009. In 2009, the deficit was 5.9% of the GDP, which would put it at 3% by 2013. The reality is that the budget could already be deficit-free thanks to high oil prices. What does 3% mean? How did we arrive at this figure? De facto, we have a deficit-free budget even now.
At this point, we approach one of the address’s main concerns – the need to reduce our dependence on oil revenues. This is indeed an urgent problem for the budgetary and macroeconomic policy. How do we formulate new budget rules? What portion of oil-and-gas revenues should be channeled into current expenses?
There are various proposals on how to formulate these rules, but the address does not mention any of them. It merely presents a declarative appeal to reduce the dependence on market-determined income without mentioning any mechanisms for doing so.
On the one hand, additional budget revenues encourage expenses. On the other, price fluctuations make us nervous from time to time and compel us to look for other ways to compensate. We know that insurance payments are an urgent issue. In fact, we are increasing the tax burden on the economy. The logic seems absurd – we have large additional revenues, but we are increasing the tax burden to balance out the budget.
These are the main problems facing our budget. The first question is whether to increase the level of tax exemptions. The second is how to calculate expenses – based on incoming revenue or in some other way? The address does not even mention this.
It turns out that it is possible to do remarkably little on the basis of this address. All possible decision-making options are either suspended or well camouflaged.
I believe that this absence of political will has less to do with certain features of our political structure or the forthcoming presidential elections than many think. It is more indicative of a mainstream political trend that is now taking shape. It may be described as follows: things are not bad enough for the government to take action, but not good enough for economic players to see a bright future for the Russian economy. Under the circumstances, the preservation of political balances is a more important objective for the “broader” government responsible for Russia’s economic policy. They can simply ride on the inertia.
On the one hand, we have very high export revenues. On the other hand, we have accumulated a number of problems, the resolutions to which are fraught with the possibility of upsetting the balance. No one is ready to be held accountable for changing the status quo. It is a systemic problem shared by Russia’s economic policy and its current politics – the 2011 budget address only serves to more clearly reflect it.