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USING THE VALUE ADDED INDEX IN INDIRECT TAXATION
Abstract. Object of research are problems of formation and the value added taxation, a research objective is development of theoretical provisions and methodical recommendations about the value added taxation in the conditions of improvement of tax administration. The article deals with the methodological aspects of the value added formation from the point of view of foreign and Russian authors. The paper covers the possibility of using value added index for the assessment of the taxation burden of an economic entity. The author gives an expanded interpretation of the added value that can be used when forming the tax base in indirect taxation. Keywords: tax, price, value added, consumption, economic entities, gross domestic product.
VALENTINA RYKUNOVA
PhD in Economics, Associate Professor of Economic Security and Taxation, Southwest State University, Kursk Valentina0209@mail. ru
Indirect taxation has a force of attractiveness in many respects: it is a reverse-charge mechanism upon sale for manufacturers and entrepreneurs and a stable source of revenue to the budget system; and in the presence of a set of indirect taxes and differentiated rates for them it is possible to get a progressive and, therefore, a fair method of income taxation of different social groups. M.N. Sobolev says about indirect taxes that these taxes have always been very profitable for the state because they cover items of mass consumption [1]. From a psychological point of view, the growth of direct taxes is always less preferable than an increase in indirect taxes. Since it is necessary to distinguish between the objective (loss of resources for a taxpayer) and subjective taxation burden [2], on the basis of a subjective assessment of the burden of taxes, payers and politicians may prefer 'invisible' indirect taxes to the direct ones. The fact that indirect taxation, unlike income tax, under certain conditions, has minimal negative impact on savings is also can be used in favor of strengthening the role of indirect taxation.
Modern indirect taxes are value added taxes, excise taxes, sales taxes and customs duties. Value added tax (VAT) is one of those taxes that form the structural component of budget revenues and is the least dependent on commodity prices [3]. Value added tax is one of the most difficult for calculation, payment and control on the part of the taxation authorities.
Value added index lies in the basis for calculating the value added tax [3]. When considering the value added index the principles and methods of its formation and taxation are interpreted differently. Modern scientists, considering the mechanism for calculating the value added tax at the level of economic entities, treat the concept of value added as follows: value added is the difference between the cost of sold goods, works and/or services and the costs of material inputs related to production and distribution [4]. Ultimately, the dependence between the rate of the created value added and the amount of its withdrawal to the budget weakens. Insufficient development of the issues of value added formation, methods of its assessment and withdrawal of its part to the budget determine the relevance of this study. This paper presents the principles and methods of value added index formation and their use in taxation.
There is no generally recognized unambiguous interpretation for the nature of added value in economic theory yet. The most common ones are two contradictory theories. The first one is a classical concept of surplus value (Adam Smith, David Ricardo, Karl Marx), according to which the surplus labour of hired workers is the source a new cost [5]. According to the theory advanced (or invested) capital is divided into two parts which have different purposes. One part goes to form the means of production (past labour) and the other goes on wages payments (living labour). That part of the capital, which is converted into the means of production, i.e. in raw material, auxiliary materials and instruments of labour in the production process does not change the value of its
cost. On the contrary, the part of the capital, which is converted into labour power in the process of production, changes its cost. It reproduces its own equivalent and, moreover, the surplus, surplus value [5]. Accordingly, it is recognized to distinguish the necessary labour (the equivalent of the cost of labour) and the surplus labour (the equivalent of surplus value).
In accordance with the other concept (Jean-Baptiste Say, John Bates Clark) labour, capital and nature are involved in the creation of cost. According to the factor model the following factors Nature, Capital, and Labor are involved in the formation of a new cost. Value added is formed by the repeated multiplication of past labour, or rather by its intellectual part, embodied in capital and production potential of a person, plus the cost of nature extracted by living labour.
Goods usually go through several stages of manufacturing and sales before they get to the end consumer. In the production of goods (works, services) the cost of the consumed in the production process fixed assets, intangible assets, labour costs, producer's surplus is added to the original staples of production (raw materials, supplies). Newly created cost added to the cost of the acquired material resources is value added. The price of goods (works, services) is formed taking into account the abovementioned items. In general, value added is the market price of the total output produced by a company minus the cost of the consumed raw materials, purchased from a supplier.
Russian statistics determines the value added index by means of a calculation at the macrolevel. At the microlevel (in the practice of accounting or tax accounting management at enterprises and institutions) the value added index is not calculated. In the System of National Accounting (macrolevel) GDP index when calculating it using production approach, is estimated as the sum of gross value added in all sectors/industries of economy plus net taxes on products, which include VAT, excise taxes, customs duties; the term 'net' means that the subsidies on products are already withheld, i.e. the value of the gross domestic product is equal to the sum of macrolevel value added, value added tax, excise taxes, customs duties.
Thus, the sum of gross value added in all sectors is less than the gross domestic product of the country. The gross value added at an industry level is a gross cost output of goods (services) of the industry under consideration less the value of their intermediate consumption.
State authorities in countries with market economy focus on gross domestic product, the amount of which directly depends on the value added produced by enterprises. The amount of the produced value added affects the amount of returns received by economic entities. Thus, theoretically various interests at the micro- and macrolevels of economics are in harmonical unity.
Value added at macrolevel is the whole complex of the newly created by all the economic entities of the state value in all sectors of the economy, the value of collective public services and net consumption taxes. Differentiation of these concepts is of great importance for determining the value added part, withdrawn to the budget.
In order to use value added index in indirect taxation, it seems appropriate to distinguish between value added at macrolevel and value added at microlevel describing it as follows: value added at microlevel (of economic entity) is included in price newly created in production process (sale) value related to products sold to consumers, to the produced but not sold end products, to the products which are in the process of the production. At this, value-added index of economic entity is equal to the sum of the above mentioned indexes.
The formation of value added at the microlevel, taking into account production in process and unsold final products, makes it possible to apply the direct method of VAT calculating [6].
Based on the calculation of GDP in terms of revenue and expenditure components of the system of national accounts, from the economic point of view, there are three ways of calculating value added tax [7].
The vast majority of the countries, using the value added tax, calculate value added tax liabilities according to the recovery method (indirect deduction method) [8]. The proponents of this method explain its application by the following reasons:
- firstly, when using this method the incurrence of tax liabilities is closely connected with the moment of conducting an economic transaction, and the invoice is a document confirming it;
- secondly, the application of this method facilitates tax control and allows arranging crosschecks;
- thirdly, only this method allows collecting VAT at several rates;
- fourthly, the recovery method suggests using any tax period, while the accounting balancesheet methods allow calculating tax liabilities only for the period of submitting accounting reports, that is their main disadvantage [8].
Imputation mechanism, which allows avoiding negative cascading effect of the accumulation of indirect tax in the price of goods at their multiple resale, differs VAT from other indirect taxes.
In case value added tax functions as consumption tax, the ultimate price paid by a consumer for goods, should be equal to value added at all the stages of goods production and sale. For VAT as consumption tax, the volume of retail sales will be the basis for imposition of VAT at macrolevel. Thus, if VAT has a form of consumption tax, its amount is equal to retail sales tax, collected by installments at each stage of production process and sales. The main difference is that the tax is withheld once at the phase of realization of goods to a final consumer, which is a disincentive factor for retail sales development.
The cost of goods sold in retail, exceeds the value added in the production process and realization of these goods in the country. When selling goods for export directly opposite problem turns up: the value added in the country of production is not included in the amount of retail sales, that is why, the amount of the value added in the country exceeds domestic retail sales.
With regard to the budget losses due to value added and sales tax evasion, it is believed that the budget losses are higher due to value added tax evasion than due to sales tax evasion, but the probability of early detection of these abuses is also significantly higher [9].
On the other hand, the possible VAT evasion in quantitative terms should be lower than singlestage retail sales tax evasion, due to the fact that the payment of the amount of tax on the entire value added is distributed by stages of operating cycle in the production process of goods (services). This leads to the fact that one VAT evasion causes only a loss of a part of the total amount of tax for the state budget, while the fact of single-stage retail sales tax evasion does not allow replenishing the entire amount of applicable tax liabilities to the public treasury [10].
Value added index can be used for assessment of the tax burden of an economic entity (microlevel). The method of assessing the tax burden of an economic entity using value added index allows determining the amount of value added created by an economic entity and given to the state. The value added created by an economic entity can be considered as its income and, hence, as a source for paying taxes. When using this method of assessing the tax burden of an economic entity, value added index allows averaging tax burden assessment for different entities and ensuring its comparability.
The existence of the problem of choosing between the value added tax and sales tax can be explained by the absence of enacted at the legislative level effective measures to prevent illegal inclusion of the tax deductions, which encourages the growth of VAT claimed for reimbursement from the budget [11].
Thus, the transition to VAT payment according to the destination principle, the tax base is reduced to final consumption of home economics and government non-salary expenditures on goods and services, i.e. becomes equivalent to the retail sales index. When calculating value added at microlevel it is necessary to distinguish between the concepts of value added related to products sold to consumers, value related to produced but not sold end products, the value added related to the products which are in the process of the production. The formation of value added index at microlevel will allow reliable determining of the taxable turnover for value added tax and simplifying the methods for tax calculation.
When calculating the tax payable to the budget from the amount of value added related to sold products, under elastic demand, the tax burden is shuffled off on a consumer, lowering the tax burden on economic entities.
REFERENCES
1. Sobolev M.N. Sketches of financial science. Pg: Proletarian 1925.
2. Dalton H. Principles of Public Finance. London, 1954. 351 p.
3. Sevryukova L.V., Rykunova V.L. The main trends in the development of value added tax in the conditions of the Russian tax reform // Proceedings of the Southwestern State University. 2009. № 4. S. 90-95.
4. Panskov V.G. Taxes and tax system of the Russian Federation: the textbook. M .: Finance and Statistics, 2006. 211 p.
5. Marx, Capital. St. Petersburg: IG Lenizdat, 2013. 512 p.
6. Rykunova V.L. Practical aspects of the change of methodology for calculating the value added tax // Managerial Accounting. 2010. № 1. pp 79-88.
7. Zee H.H., Shome P. Value-Added Tax. Tax Policy Handbook, 1995. 186 p.
8. Tait A. Value Added Tax: International Practice and Problems. IMF, 1998. 145 p.
9. Messere K.C. Tax Policy in OECD Countries: Choices and Conflicts. IMF, 1993. 383 p.
10. McMorran R.T. A Comparison Between the Sales Tax and a VAT. Tax Policy Handbook, 1995. 185 p.
11. Sevryukova L.V., Rykunova V.L. Problem alternative choice: VAT or sales tax // Finances and Credit. 2009. №39. S. 40-45.
CRIMINAL "FACE" OF MINOR PROSTITUTION IN THE CONTEXT OF DEVELOPMENT OF CRIMINAL-LEGAL MEANS OF ITS EXTENSION IN MODERN RUSSIA
Abstract. Prostitution, being an 'unsinkable' iceberg of the modern criminal environment in the sphere of sexual exploitation of a person, demands radical innovative law-making decisions within effective fight against it at the level of law enforcement agencies. Today in Russia there is the regulatory legal base in the field of counteraction to development of sex services, however, in author's opinion, efficiency of right application of these norms is questionable. The number of prostitutes, especially, minor, grows every day, because victimological aspect of criminal law recognizes them as the victims of the circumstances, compelling to trade in own body. At the same time, the shocking data of official police statistics testify the steady growth of illegal sex trade in Russia that suggests the need for complex revision of the current legislation. The author, relying on long-term researches of the problems, connected with searches of effective measures of criminal and legal fight against prostitution of minors, reflects own vision of a number of questions, caused by scope of research, and makes separate offers on correction of standards of the criminal code of Russian Federation.
Keywords: prostitution, minor, criminal and legal means of fight, sex service, punishment, legislation, legal proposition.
ALLA STANSKAYA
PhD in Jurisprudence, Associate Professor, Department of Criminal Law and Criminal Trial, Moscow State Humanitarian University after M. A. Sholokhov, Moscow antivimogatel@yandex. ru
"God loves people too much to watch indulgently the sins made by them.
Each of us has a chance to get out of a hole and if a man passes fire and water, believes in absolute favor of the Lord
- only then he will enter the Kingdom of Heaven"
(Matfey, 1:05).
O. Savelyeva marks that "in a civilized society the sexual sphere of life is a subject of legal regulation"1. In this regard, Russia is not an exception, possessing various regulatory legal base in the sphere of counteraction of prostitution - to the most ancient criminal phenomenon caused, de jure, by relative freedom, and, de facto, by absolute freedom in relationship of sexes. Today it is difficult to overestimate the negative, antisocial, illegal role, which is played by "paid love" in modern society.
The author notes that development and improvement of the legislation, directed on fight against prostitution, is carried out by the state, both within criminal and legal policy of counteraction of crime, and by entering the amendments into administrative branch of the right.
Nowadays sanctions of articles №240 and №241 of the criminal code of Russian Federation2 prescribe punishment for the organization and involvement in prostitution. Besides, with receiving
1
See: Savelyeva O. Dirty porno or winged Eros?//Business lawyer, 2000, No. 9.
2 The criminal code of the Russian Federation of 13.06.1996 N 63-FZ (an edition of 21.07.2014) (with amendment and additional, in force from 04.08.2014)//Collection of the legislation of the Russian Federation, 09.06.2014, No. 23, Art. 2927.
