Sergei Guriev published an article today on federalism, in which he discusses one of the coalition’s most important policy principles: redistributing money from the center to the regions.
Give it a read.
*The regions have found themselves in a difficult situation. During a recession, their revenues fall: corporate profit tax is far more sensitive to business cycles than the federal VAT, while the property tax still has not become fully effective. At the same time, the May decrees (a set of policy directives issued by Putin in May 2012) require them to increase spending. It is no coincidence that in its December report, “Russia's Economic Risks Will Compound Weak Local And Regional Government Finances” Standard & Poor’s forecasts a doubling of regional budget debt over the next three years. This has direct political consequences. A governor who lacks money is not an independent political actor. First and foremost, he depends on the federal center, which can help with funding (or ask state-owned banks to extend a loan), rather than on his voters. This means that Russia remains a federation only on paper. What needs to be done to restore the regions’ economic independence? First, the federal budget’s share of the consolidated budget must be substantially reduced. Second, interbudgetary transfers should be allocated according to transparent rules, rather than through bargaining between regional and federal officials. Finally, state-owned companies should be privatized—or their management should be depoliticized to the greatest extent possible. The remaining shareholdings should be owned by the Pension Fund, company boards should not include government officials, and their corporate procedures should be as transparent as possible. Full text: https://slon.ru/posts/51938 *