Fiscal policy - a state policy in the field of taxation, which should be aimed at achieving the objectives related to the promotion of economic growth and full employment, as well as to meet the challenges set by the structural, social and regular policies.
a result of its operation there are significant changes in the expenditure and revenue of the state budget.These factors can be carried out automatically on the basis of changes in the economic situation (without specific changes in the law) and through targeted activities of the two branches of government.That is, depending on the kinds of economic instruments of fiscal policy are divided into discretionary and non-discretionary.
discretionary policy can be represented in the form of legislative changes in the system of taxation and government spending in order to ensure stability and achieve the main goals of macroeconomics.
The main instruments of this type include:
- Adjustment of tax revenue by changing the number of taxes and their rates.Thus, changing the tax rate, the state achieved by reducing withholding income during a recession or a decline in revenues during the sharp increase in the rate of turnover.This tool is used in the fight against inflation.
- Providing unemployed people with work.Funding for this activity is carried out mainly from the state budget.
- Implementation of social programs such as old-age pensions and disability, and various allowances, subsidies to pay for education, etc.These programs provide a stabilization of the economy at different undulation functioning of the country.
non-discretionary fiscal policy is based on the relationship of tax revenues and expenditures of the state and activity of the business sector, as well as changes in economic conditions.This interaction is carried out automatically and immediately reflected in the specific weight of taxes in budget revenues and related costs at social events on the expenditure side.This can be illustrated by the example of the tax on income of individuals.After all, with the increase of income under this automatically increases the amount of unemployment benefits.When there was a decline in the economic processes of the country incomes drastically reduced and, consequently, reduced tax revenues from wages in the budget (income tax is taken on a progressive scale for scores).As a result of lower tax receipts appears the budget deficit, which is a satellite of the drop in production.
Fiscal policy can be classified and other grounds - stimulating or restraining.Thus, stimulating the policy is applied at the time of general economic downturn and suggests a sharp tax cuts and increased government spending, which lead to the emergence of budget deficits.Contractionary fiscal policy can be used during high inflation and is associated with increased taxation and reduced government spending.As a result of its implementation there is a budget surplus that could be used to repay public debt.
In assessing the effectiveness of the policy outlines a number of factors supporting its limited potential use, namely:
- the sharp fluctuations in the structure of public expenditure (for example, the need for additional funds for the state's defense capability, environmental protection and scientific research) do not allow to effectively use and stimulating and moderating policies;
- high efficiency of the use of fiscal instruments can only be achieved in the short term;
- delay effect is present: the need zatrachivaniya additional time for the adoption of appropriate regulatory document, after the entry into force of that positive results occur only after a certain period.
However, the high efficiency of fiscal policy can be achieved in its implementation together with monetary.
