Subsidies are payments to consumers made from the local or state budget, as well as payments to local authorities or individuals and legal entities that carry out special funds.
Instructions
Step 1
The very word "subsidy" came into the Russian language from Latin. Subsidium translates as "support", "help". According to the Budget Code of the Russian Federation, there are two types of subsidies.
Step 2
The first type is a transfer between different budgets. Its purpose is to jointly finance those expenditure obligations that lie on the lower budget. The second type of subsidies is money that is provided both from budgets and from extra-budgetary funds to individuals, as well as legal entities that do not represent budgetary institutions.
Step 3
There are several main properties that subsidies have:
- the targeted nature of the provision of funds;
- provision of funds on a gratuitous basis (however, they can be returned if they were spent on the wrong purpose for which they were allocated);
- co-financing (condition of equity financing).
Step 4
In addition, a distinction is made between direct and indirect subsidies. The use of direct subsidies is possible in cases of financing such projects as fundamental scientific research, retraining of existing personnel, the introduction of new types of equipment into production, and the issuance of grants for development work. Thus, subsidies have two roles: the first is to encourage those industries that will pay off economically in the future, the second is to support important projects strategically, but which are unprofitable.
Step 5
Monetary and tax funds are used to carry out indirect subsidies. In the activities of the state, this can be expressed in the return of customs duties or direct taxes, in tax incentives, in the implementation of deposit insurance, in the provision of preferential, as well as export loans.
