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Irkutsk Senator Vitaly Shub in an interview with EastRussia on how to develop the Baikal region - EastRussia | Interview






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"Proceeds from new enterprises should remain in the regions"

Senator Vitaliy Shuba on how to build budget cooperation to solve the problems of the Baikal region

The Irkutsk Region, the largest constituent entity of the Russian Federation in the Baikal region, according to 2016, showed a decrease in government debt from 28 to 19,6 billion rubles. The reductions were achieved thanks to both the general growth of the regional economy, and subsidies and budget loans from the federal center. EastRussia is told by Priangarya senator Vitaly Shub about how they managed to convince the government to ease the debt burden of a promising region and what role budgetary relations play in arranging the East of Russia.

"Proceeds from new enterprises should remain in the regions"
- The Federation Council is often called the "chamber of regions" of the Russian parliament. Who do you feel more - a federal legislator or a representative of the Irkutsk region?
"Indeed, the senators act not only as authors of laws, but as spokesmen for the interests of those subjects of the Russian Federation that they represent in the Council of Federations. But in lawmaking, each of my colleagues specializes in a topic. My direction is the fiscal sphere. It so happened that in the lower house of parliament I worked in the Duma committee on budget and taxes, in the tripartite commission on improving intergovernmental fiscal relations. Now I work on the same field, but already in the Federation Council. A total of several dozen existing laws are in my parliamentary portfolio. A significant part of them, one way or another, concerns the budgetary relations between the federal center and the regions.

- Regions often do not have enough money to close the gaps in the budget, and Moscow requires solving social and economic problems. "Money gives, but not enough," many governors complain.
- Absolutely. Over the past ten years, hundreds of regulations have been adopted - including federal laws, government decrees, presidential decrees - which oblige regions to incur additional financial costs. These gaps must be closed. How? Due to what? Due to the improvement and optimization of intergovernmental relations. This work of the Federation Council Committee on Budget and Financial Markets began more than two years ago. It comes down to an inventory of the spending powers of all three levels of the power vertical: the federal center, the regions, and the municipalities. It is necessary to unambiguously determine which level is responsible for what social expenses.

To date, this work on the inventory of expenditure powers is almost done. As well as work on the redistribution of tax and non-tax revenues between the levels of the budget system. At the same time, one must understand that the economic and tax potential of the regions varies. In order to equalize the budget provision of the subjects of the federation, the Fund for Financial Support of the Regions (FFSR) is provided. However, as a result of applying a unified methodology for allocating subsidies, it turns out that about 40% of the fund's resources receive only 10 from 85 of RF subjects. My proposal is to distribute subsidized financial assistance to two funds (one for highly-subsidized regions, traditionally receiving a large amount of financial support from the state, the other for regions with medium and high levels of budget provision). This idea finds support among my colleagues, including members of the tripartite commission on intergovernmental fiscal relations.

EastRussia Dossier. Shuba Vitaliy Borisovich, 66 years, Deputy Chairman of the Committee on Budget Policy and Financial Markets of the Federation Council, Doctor of Economics, Professor, Honorary Citizen of Bratsk and the Irkutsk Region. He worked at the upper-air station in Nizhneudinsk, the Bratsk Aluminum Smelter, the Bratskzhelezobeton Combine. In 1990, he was elected a deputy of the Bratsk City Council of People's Deputies, which he headed in 1992. Since 1993 year begins many years of work as a deputy of the State Duma of the Russian Federation, elected by the Bratsk single-mandate district. Since December 2007 - a member of the State Duma of the V convocation on party lists from the party "United Russia". In October 2013, the Legislative Assembly of the Irkutsk region nominated Vitaliy Shuba for the position of representative of the Legislative Assembly from the region in the upper house of the Federal Assembly of the Russian Federation - the Federation Council (SF). Among the recent initiatives - a number of amendments to the draft budget 2017, aimed at increasing support for the regions of Russia. A convinced supporter of the view that the federal center should introduce tax incentives only with the consent of the regions, without prejudice to their interests.

- Thanks to this assistance, the Irkutsk region reduced its debt by almost a third.
- Yes. This year, the subsidy for the Irkutsk region is more than 7 billion rubles or one and a half times more than in the past. In addition, the federal center allocated the region about 18 billion rubles. subsidies, subsidies, including about 1 billion rubles for partial compensation of labor costs to employees of the public sector, 625 million for road maintenance, 255 million for budget credits (at the rate of 0,1%). The subsidies are, of course, good. But it is also necessary to create a motivational mechanism for the regions. Today, if the subject of the Russian Federation showed an increase in the economy, it means that its tax potential and tax revenues have increased. And this leads to a reduction in subsidies from the federal budget! That is, there is no motivation to grow economically in the region.

Therefore, the following solution of the problem suggests itself: the economic growth that the regions themselves ensure due to successful business activity in their territories should remain at their disposal. Plus, it’s time for the federal center to stop setting tax breaks for regional and local taxes. If the authorities of a region, province, city, or district deem it necessary, let them introduce benefits to local taxpayers.

- Does the government share this approach?
- Yes, our arguments in the White House were listened to. And the Cabinet of Ministers made a decision to impose restrictions on the establishment of new tax benefits for regional and local taxes before the year 2018. And since 2018 year, is expected to start a gradual abolition of tax benefits for regional and local taxes, following the recommendations of our profile committee. In other words, the Federation Council is currently developing a set of measures to introduce such changes in the regulatory framework, so that the regions have an incentive to develop their own revenue potential, in particular, the right to retain to themselves part of the tax revenues received as a result of preferences for certain sectors of the regional economy.

- Intergovernmental relations at the level of "region-municipalities" are no less dramatic than the "center-regions" ...
- And the example of the Irkutsk region (and any other subject of the Russian Federation) is clearly visible. Municipal authorities often reproach the regionals for leaving them too little of tax revenue. So, at the end of last year the mayor of Irkutsk came out with an initiative from the municipal community to make amendments to the regional law "On interbudgetary transfers and norms of deductions of revenues to local budgets." Deputies of the regional parliament supported him. The essence of the changes is to increase the share of income from personal income tax (Personal Income Tax) from 15 to 18% in favor of municipalities, and to leave a quarter of the revenues received from applying the simplified taxation system (STS) at the disposal of municipalities.

In fact, the proposals of the municipalities are correct. As the mayor of the capital city, he takes care of the budget revenues, and the heads of other municipalities agree with him. And we have repeatedly discussed his initiative with him, the governor of the Irkutsk region Sergey Levchenko and the speaker of the regional parliament Sergey Brilka also took part in the discussion. As a result, they came to the following decision: do not touch personal income tax, as this is a federal tax and the federal center can change the share of payments to local budgets at any time. And revenues from the simplified tax system, according to which local entrepreneurs work, are quite fair if they remain in large parts of their place, that is, in the budget of municipalities. But this rule will work, as it was originally envisaged, in the 2018 year.

- In general, what you have said follows: at all levels government should strive to stimulate economic activity in the territory entrusted to it.
- Of course! To ensure that the financial capacity of that or territory is determined not only by grants and loans from the higher-level budget and bank loans, but, above all, by increasing tax revenues as a result of more productive activities of existing enterprises and the emergence of new ones.

- To this end, the Far East is actively creating TOP - the territories of advanced social and economic development, operating in a special tax and customs regime. For the Irkutsk region, TOPs are relevant, as a way to stimulate the regional economy?
- Of course. Although they, according to the government's plan, began to be created in the Baikal region a little later than in the Far East, but in the Irkutsk region, the Usolye-Sibirskoye TOR has been officially opened today. Next in turn - TOP "Baikalsk". The peculiarity of Irkutsk TOPs: they are created in the territory of homonymous towns with the same name, whose town-forming enterprises have declined. So, the city of Usolye-Sibirskoe, which is located in 90 km to the north-west of Irkutsk, was traditionally tied to the local plant "Usoliekhimprom", which produces household and industrial chemicals. And the city of Baikalsk is at the Baikal Pulp and Paper Mill (JSC BPPM), notorious for its industrial discharges into Lake Baikal.

Both enterprises are now closed. And the first residents were registered in the Usolye-Sibirskoye TOR (the production of disinfectants and antiseptics, OOO SBT-Irkutsk (production of granulated cast iron) and Usolmash LLC (production of ore-dressing equipment) .The total amount of investments announced so far 300 million rubles In Baikalsk the TOP will focus on tourism and recreational activities, but to make predictions how effective the regions will be in terms of economic and financial returns in the Irkutsk region - it is still early.

- What other growth points, except for the TOP, have become noticeable recently in the Irkutsk region?
- For example, in January, our legendary gold-bearing deposit Sukhoi Log in the Bodaibo district of the Irkutsk region finally acquired, as a result of the auction, an investor, behind which are the powerful capitals of the companies Rostech and Polyus Gold. Undoubtedly, investors will invest in the development of transport and social infrastructure of the Bodaibo region lost in the taiga.

- How active do you think investments are today in the tourist and recreation sector of the Irkutsk region? The same Chinese, for example?

- You know, in my opinion, we missed the situation with the organization of civilized tourism in the Baikal region. In recent years, under the guise of such tourism (partly as a result of the connivance of the authorities), unauthorized development of a significant part of the Baikal coast took place - different cottages, cottages, recreation centers ... Where these objects are there are cars. This irreparably beats on the ecology: under the wheels of jeeps the soil is torn, the roots of a unique flora are bare, the plants are dying. I'm afraid that if we give a "green light" to foreign investors, the process can worsen. Before making such a decision, it is necessary to thoroughly calculate all possible consequences and take into account all the nuances.

- And today the federal center helps to solve the task of ecological preservation of Lake Baikal?
- Yes. Through the federal target program "Protection of Lake Baikal and socio-economic development of the Baikal natural territory at 2012-2020 years." The main sources of industrial discharges into the lake waters were, as is known, our BPPM (on the territory of the Irkutsk region) and the Dzhidinsky tungsten-molybdenum combine in Buryatia, closed in the late nineties. But these enterprises for decades of their activity left tens of millions of tons of waste on the coast. And today, the Program implements measures for their elimination and utilization: construction of solid waste landfills, waste transfer stations, destruction of landfills and land reclamation.

The front of the giant works - more than 140 settlements, where 122 lives thousands of people. The volume of financing for nine years is about 58 billion rubles. Of these, more than 48 billion - from the federal budget, and 7,5 billion - from the regional budgets of the Irkutsk region, Buryatia and the Trans-Baikal region. Three years ago a new plague came to Baikal - the so-called spirogir alga. The plant was full of shallow water almost all along the perimeter of the lake. How to deal with dangerous flora - no one knows yet. Scientists are working on the question of the reasons for its appearance. One of the versions that the growth of the spirogyra is the result of the use by the enterprises in the technological processes of chemical detergents. These detergents, passing through the treatment facilities, destroy their biological purification, and then the untreated effluents fall into the lake. There is my appeal to the General Prosecutor's Office of the Russian Federation to check such enterprises for compliance with environmental legislation.

- If you talk about other socio-economic issues relevant to the region, as far as I know, your mediation was very effective in resolving the conflict between the two employers of the region - Sayanskkhimplast and Rosneft. How did you manage to bring the parties to the world?
- Well, I would not say that it was a frank conflict. Just certain disagreements, which, however, brought both companies to trial. The bottom line is that Sayanskkhimplast (SHP) produces (among other chemical products) polyvinyl chloride - a material widely used in various industries. And the source material for this production, ethylene gas, is traditionally supplied to it by the Angarsk Polymer Plant (APP), a Rosneft subsidiary. But it does this without concluding a long-term contract, in which prices and volumes of supplies would be fixed. That is, for many years now, both counterparty enterprises have been deprived of the opportunity to plan economic activities in terms of the production and sale of their products.

If the parent company, Rosneft, had given permission to the Angarsk Polymer Plant to conclude such an agreement with Sayanskkhimplast, the issue would have been removed from the agenda long ago. But the situation only worsened after an accident occurred in February last year at the ARC and the supply of ethylene to CPS stopped. The company, which provided polyvinyl chloride about half of the country's needs and more than 2 thousands of jobs in the Irkutsk region, has risen. Only four months later, deliveries resumed, but again without a contract and at a price that did not seem at all profitable to the buyer of ethylene. Then, as a member of the Federation Council from the Irkutsk Region, I sent a letter to the Russian government asking me to consider the situation around Sayanskhimplast. Then he initiated a meeting on this issue in the Federal Antimonopoly Service.

I cannot say that only through my efforts (many parties and authorities participated in the process), but just before the new year, NK Rosneft and Sayanskkhimplast JSC entered into a settlement agreement during the next session of the Arbitration Court of the Irkutsk Region. The parties agreed on the price and volumes of ethylene supplies. And, in the near future, the issue of concluding a full-fledged long-term contract will be resolved.

Alas, during those months that the company did not produce PVC, the regional and Russian markets managed to be occupied by Chinese companies. And now it will be very difficult to restore its previous share to the enterprise.

EastRussia Help. The Irkutsk Region is located in the southern part of Eastern Siberia and is part of the Siberian Federal District of the Russian Federation. This is one of the three subjects of the Russian Federation located around Lake Baikal. Area - 767,9 thousand square meters. km (almost like the area of ​​Turkey). Population - 2,3 million. The basis of the regional industrial complex is non-ferrous metallurgy, timber, woodworking and pulp and paper industry, mechanical engineering and metalworking, electric power, fuel, chemical and petrochemical industries. The share of these industries accounts for about 88,1% of the gross industrial output of the region. Following the results of 2016, the Irkutsk region demonstrated industrial growth by 5,7%, agricultural production growth - by 5,9%, investment growth by 4,3%, growth in the volume of construction work - by 24, 3%. At the same time, real incomes of the population fell by almost 10%, and retail trade - by 5,7%.

- The powerful technical, scientific and human resources are concentrated in the Baikal area. The population here is about the same as in the Far East - about six million people. Maybe it's worth combining these regions into one 12-million macroregion, with a single management center, common investment standards, common preferences for all? ..
- In the context of federal target programs, such an association has already taken place. For example, for both Eastern Siberia and the Far East, the solution of problems of transport accessibility, population increase, more efficient energy supply, development of industries, with a high degree of processing, nature protection, and many others is topical. And the corresponding regional component is already laid in the national sectoral programs.

Moreover, today the Federation Council is discussing a draft law (it is prepared by a working group headed by Senator Vyacheslav Shtyrov, I also enter it) "On special conditions for the accelerated development of the Far East and the Baikal region." It outlines directions of industrial policy for the two macroregions, peculiarities of regulation of budgetary and tax legal relations, tools for the development of the agro-industrial complex and mechanisms for effective control over the implementation of the norms of environmental and nature protection legislation, special pricing and tariff policy regimes. The adoption of this law presupposes the amendment of many current federal laws: on environmental impact assessment, on state regulation of aviation development, on customs tariffs, on state social assistance and pensions, on non-profit organizations, and so on. That is, the legal field will be adapted to the objective needs of the development of the east of the country in order to make the overall system of the Russian Federation more sustainable and cost-effective.

And in this context, I do not see any reason to do any enlargement, say, territorially and administratively.

- What bills are you still working on today?
- Together with my colleagues - Senator from the Ulyanovsk region Sergey Ryabukhin and senator from the Rostov region Evgeny Bushmin - we prepared by the beginning of this year two bills aimed at establishing order in the production and turnover of alcohol and alcohol-containing products. The first involves introducing amendments to the Criminal Code and the Criminal Procedural Code of the Russian Federation, which toughen penalties for forgery of excise stamps and illegal sale of alcohol and alcohol-containing products. Now for such crimes as alcohol trafficking without a license and forgery of excise stamps, there is a fine of up to 300 thousand rubles and a prison term of up to three years. Our option: a fine of up to three million rubles, or forced labor or imprisonment for up to three years. (Note: the bill passed by the State Duma in the first reading 10 March). The second bill is designed to exclude the entry into Russia of illegal alcohol and alcohol-containing products from other countries. Among the measures we proposed are: to equip the railway transport carrying alcohol and its derivative products with the GLONASS system (in order to track where, to whom, and in what volume all this is coming), to limit the transportation of alcohol to the territory of the Russian Federation for personal use of five liters, to prohibit the sale of alcohol and alcohol-containing products through the Internet and other ways of countering offenses.

- This is so that the recent Irkutsk tragedy does not happen again, when people are poisoned with the tincture "Hawthorn"?
- Including to prevent such cases. But we in the Federation Council began to work on the "alcohol theme" since the beginning of 2015. The chairman of the upper chamber, Valentina Matvienko, then initiated the creation of a working group, which I also entered. The reason for this was a decrease in monetary receipts to the country's budget from excise taxes on alcohol. There was a massive use of tricks from unscrupulous entrepreneurs to circumvent the payment of this form of tax. Therefore, we made a number of relevant changes to the Tax Code. As a result, in ten months of 2016, the volume of confiscated counterfeit alcoholic products reached 37 million liters, and the level of collection of excises for strong alcohol increased by 36 billion rubles compared to the same period of 2015.