Public Finance and Business in Russia: in Search of Balance

DOI: 10.20542/0131-2227-2014-11-70-76

E. Gontmakher, Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO RAN), 23 Profsoyuznaya Str., Moscow, 117997, Russian Federation (

Abstract. Public finance and entrepreneurship are interlinked by numerous ties. Primarily, these are the tax system and social insurance payments. The principles of respective governmental expenditures should be installed in the framework of the conciliation between the state, business and the employee. The analysis shows that in today's Russia, the balance between the interests of the state (implemented, among other mechanisms, through the budgetary system) and the business has not been found yet. There is a clear dominance of the executive branch of authority over the legislative branch. This leads to the adoption of insufficiently neat decisions that have highly negatively impact on the entrepreneurship. The problem has fully been manifested, in particular, by the latest reform of the pension system, as well by the continuing efforts of both companies and individuals to evade from the taxation. No less important is the interaction between the state and business in improving the quality of human capital and, first of all, of the high education and vocational training for the domestic labor market. Until now the situation here is quite unsatisfactory. The problems start from the level of school education, the quality of which does not meet the modern requirements. Easy access to higher education in our country is largely nullified by its low quality. This creates a critical shortage of qualified specialists at the domestic labor market. An important manifestation of continuing inefficiency of the Russian state can be seen in the sphere of drafting of strategic documents on the development of the national economy and social sphere in the medium term. The situation is further exacerbated due to the deceleration of economic growth and the inability of the state to maintain habitual social standards for all groups of population. Under the current conditions it is likely that Russian business will face additional burden of taxes and social insurance contributions.

Keywords: public finance, business, taxes, social insurance, human capital, labor market, Russia

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For citation:
Gontmakher E. Public Finance and Business in Russia: in Search of Balance. World Eonomy and International Relations, 2014, no. 11, pp. 70-76.

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