Fiscal Federalism

Fiscal federalism is a direction of economic reform that embraces economic, financial, and political relations. There is an opinion that we do not yet have fiscal federalism, but it is impossible to agree with this because we have fiscal and tax systems, which include a complex mechanism of fiscal-tax interrelationships at various levels of authority. For the most part, these systems had already formed before the adoption of the 1993 Constitution. The block of laws [passed] at the end of 1991 introduced a three-tiered tax system and defined the principles of fiscal organization. Decentralization and a mechanism for the interaction of various levels of the fiscal system were developed in the April 15, 1993, law on principles of fiscal rights and the right to form and use off-budget funds. To a considerable degree, the possibilities this law offers for federalizing and decentralizing the fiscal-tax system have not been used, due to the destructive impact of the economic crisis on budgets at all levels.