NEW TASKS IN INTERGOVERNMENTAL RELATIONS DEVELOPMENT IN THE SYSTEM “CENTER-REGIONS”

The article is devoted to analysis of some points of the Russian fiscal federalism model in part of intergovernmental fiscal relations that were reformed in early 2000s. Authors compared two intergovernmental fiscal systems: the first one called “soft budget constraints” that existed before that reforms and still existing second called “hard budget constraints” that was introduced in that time. The main goal of reforms was creation of budget incentives for regions and municipalities to increase the tax base through development of their territorial economies. While this system has been working last 15 years we can see that the degree of getting that goal is not satisfactory from the point of recent challenges. It is necessary to develop a new project of fiscal reforms based on conception of “market creating federalism”. It means that the fiscal system should be decentralized and some elements of asymmetric federalism have to be introduced in this area. In this course, it is necessary to reject so-called principle of equality of lower budgets regarding to the upper budget that means all lower budgets (actually governments) have to have the same tax rate for each tax coming to their budgets. For example, the profit tax rate has to be 18 percent for all regions of the Russian Federation as it is now and this is one of descriptors of symmetry in the federal system. In an asymmetric federation each region impose its own tax rate that can be higher or lower 18 percent and through they compete to attract human and financial capital on their territories.