Lyubimtseva_S_N__Koreneva_V_N_L_93_Kurs_angli

Does our system of taxation have much in common with them?

READING PRACTICE

Ex. 17. Read the text below carefully and underline the parts of it giving basic ideas about the desired features of a tax system.

Tax System Design

Recent studies have singled out some of the desired features of the tax system that should emerge as countries develop. They are as follows:

•Concentration of revenue sources. A system that raises revenue from a limited number of taxes and rates may substantially reduce administration and compliance costs. Avoidance of numerous taxes may also facilitate the assessment of the effects of policy changes and avoid an impression of excessive taxation.

•Broad and objectively defined tax bases. A broad tax base with limited exemptions enables revenue to be raised with relatively low rates. Substantial erosion of the tax base through exemptions requires much higher rates to achieve a given amount of revenue. Tax bases should be defined so as to ensure that producers and consumers can clearly estimate their tax liability when they plan activities.

•Minimization of collection lags. In an inflationary environment the real value of tax receipts may decline substantially when there are long lags in payments. High penalties are necessary to ensure that legal delays are not compounded by delinquency lags.

•Tax neutrality. The tax system should finance government operations with the least cost and disturbance to the patterns of production, and the generation and use of income. Hence, neutrality of the tax system is considered desirable, in the sense that distortions in incentives should be limited unless there are compelling reasons to discourage the production, consumption or trade of a particular commodity. The activity, most profitable before tax, should remain most attractive after tax.

Based on: Macroeconomic Adjustment, IMF Institute Words you may need:

administration costs (зд.) расходы, связанные со сбором налогов

compliance costs (зд.) расходы, связанные с обеспечением соблюдения налогового законодательства tax liability налоговые обязательства

lag n разрыв, запаздывание penalty n штраф

compound v усложнять, увеличивать delinquency n правонарушение neutrality n нейтральность disturbance n нарушение

Ex. 18. a) Read the text quickly for the main points about the major sources of revenue for the local government budget hi Slovakia.

b) Reread the text carefully and explain all figures used in it. Slovakia

Major Sources of Revenue for the Local Government Budget

The principle sources of revenue available to local governments are local taxes and fees, revenues from municipal property, a share of centrally collected taxes and transfers from the central government. Municipalities levy and collect the local tax and local fees. In a new system of national taxation introduced

in 1993 the real estate tax was assigned to local governments. The real estate tax base includes land and buildings. The tax rate is based mainly on areas (square metres of different types of property). Legislation currently provides Slovak municipalities with a total of eleven separate local fees which can be employed to generate local revenues. There are ceilings on the levels of fees which can be set, but these levels, and whether particular fees are imposed, are discretionary.

The sharing of revenues is regulated by law. Municipalities receive a share of the national government's total tax revenue, generally distributed on per capita basis. Which taxes are shared, and the proportions shared, are settled by the Act on the State Budget every year. In 1994 there were three shared taxes:

• a 29.92 per cent share of income tax on wages which is distributed to municipalities according to the number of inhabitants;

redistributed to municipalities within the area, the precise share for each municipality being equivalent to their share of the total population for the area. It is dedicated to the building, repair and maintenance of local roads.

The central state budget also provides specific subsidies to support certain activities in municipalities with up to 5,000 inhabitants. The amount of such subsidies is based on the size of population multiplied by coefficient of agricultural land quality. There are also subsidies from the central state budget for the operation of city public transport (in four cities only).

Formerly, there were substantial amounts of government aid for capital investment in infrastructure. Among these were funds for development programmes and for financing the completion of housing complexes begun before 1989. But at present, there are no specific capital grant programmes, except for city public transport (in the four cities), and ad hoc subsidies from specific state funds such as the State Environment Fund.

The share of subsidy payments to local governments in the state budget was 1.28 per cent in 1993. Municipalities may raise credit without having to apply for permission. They are able to borrow from the capital markets.

Local governments may finance capital expenditure through municipal bonds. Generally, there are two ways: either the municipality issues its own bonds, or a bank issues and sells municipal bonds and uses the proceeds to purchase the debts of the local government. In both cases the municipality guarantees the debt with its property.

UNIT 7. INTERNATIONAL MONETARY SYSTEM

A. TEXT

INTERNATIONAL MONETARY INSTITUTIONS

There is little exaggeration in saying that international monetary developments affect all individuals as workers, consumers, travellers, businessmen producing goods for domestic or foreign markets, and investors at home or abroad. The channels which transmit the impact of monetary events to people in their various roles in society are numerous.

Employment opportunities for some workers are improved when exports thrive and are weakened for other workers when foreign products compete effectively in price or quality with domestic output.

A movement in the exchange rate may benefit an individual in one of his roles but leave him worse off in another. The individual as a consumer may have a different view of and a different interest in what happens in the international monetary sphere from that of the individual as a worker.

Business activity is heavily influenced by international monetary conditions affecting prices, exchange rates, interest rates, imposition of controls on exports or imports or on capital movements.

Interdependence among nations has intensified lately, thus there is great interest in the functioning of the international monetary system.

The international monetary system is a set of arrangements, rules, practices, and institutions under which payments are made and received for transactions carried out across national boundaries. The international system is concerned not only with the supply of international money but with the relationships among the hundred or so currencies of individual countries and with the pattern of balance-of-payments relationships and the manner in which they are adjusted and settled.

International monetary relations are governed by rules of the Articles of Agreement of the International Monetary Fund and also by agreements and consultations among nations through other international institutions: the General Agreement on Tariffs and Trade (GATT), the Organization for Economic Cooperation and Development (OECD), the Bank for International Settlements (BIS), the United Nations Conference on Trade and Development (UNCTAD), the World Bank Group 2 and other organizations. The international monetary system is afflicted with problems. The main reason is that the nations that participate in it are politically independent but economically and financially interdependent.

This discrepancy determines the functions of the international monetary system; at its best, the system acts to reconcile the conflicting economic policies of its politically independent members.

In order to perform this reconciling function, the system is concerned, first, with how nations act to influence their balance-of-payments positions, with their policies that affect exchange rates.

The system is concerned, second, with how nations settle their accounts with one another. Third, the system is concerned with the amount and form of international money.

In broad terms, the international monetary system involves the management, in one way or another, of three processes:

1)the adjustment of balance-of-payments positions, including the establishment and alteration of exchange rates.

2)the financing of payments imbalances among countries by the use of credit or reserves; and

3)the provision of international money.

B. DIALOGUE

IMF'S SUPPORT FOR RUSSIAN REFORMS

IMF official: In line with the IMF's desire for greater economic stability in the world, and for stronger, more sustained growth we made a decision to support Russia with an Extended Fund Facility (EFF)3 credit amounting to about $10 billion.

Interviewer. Life has proved that4 Russia's strategy for adjustment and reform is strong, and Russian authorities are committed to the program. But isn't the program risky?

Off.: All adjustment programs supported by the IMF entail risk, since only countries experiencing balance- of-payments difficulties borrow from the IMF.

Int.: It is obvious the IMF can never eliminate all risks. But have you built any substantial safeguards into

the Russian program?5

Off.: Certainly. They include the track record established by the authorities in the previous years, broader quarterly reviews, and continuation of monthly monitoring. I feel I must emphasize here that the Russian program is the only IMF-supported program subject to monthly monitoring.

Int.: That's very reasonable, but some observers question the wisdom of negotiating a program that could be derailed by political developments in Russia and changes in the Government.

Off.: In this connection I would like to stress that the IMF does not support individuals. It supports economic programs. As long as the duly constituted authorities continue to fulfil the requirements of the program agreed with the IMF, the IMF will continue to support that program.

Int.: Is Russia receiving exceptionally favourable treatment from the IMF? The size of the loan is large, isn't it?

Off.: Yes, the loan is large in absolute terms, but as a percentage of Russia's quota, the magnitude of the EFF arrangement is fully in line with the IMF's established lending limits.

Int.: Is the program too demanding? Is there a danger that continued macroeconomic adjustment and sweeping structural changes can irreparably undermine domestic support for the reform?

Off.: It's a very important question. The danger exists, and we must guard against it. This could be done by creating an adequate social safety net with enough budgetary resources to support it.

Int.: And beyond this, I think, the government should be encouraged to do all that it can to ensure that the benefits of the reform emerge – and become evident to the Russian people – as soon as possible.

Off.: Right. This should be uppermost on their minds.

Notes

1International Monetary Fund – Международный Валютный Фонд (МВФ)

2General Agreement on Tariffs and Trade – Генеральное соглашение о тарифах и торговле (ГАТТ) Organization for Economic Cooperation and Development – Организация экономического сотрудничества и развития

Bank for International Settlements – Банк международных расчетов

United Nations Conference on Trade and Development Конференция ООН по торговле и развитию

(ЮНКТАД)

World Bank Group – группа Мирового банка

3Extended Fund Facility – система расширенного финансирования

4Life has proved that – Жизнь доказала, что ...

5have you built any safeguards into the Russian program – предусмотрели ли вы гарантии в программе для России

VOCABULARY LIST

A. international monetary system международная валютная система international monetary institutions международные финансовые организации exaggeration n преувеличение

affect v воздействовать, влиять channel n канал, путь

transmit v передавать, отправлять, посылать impact n влияние, воздействие

employment opportunities вакансии thrive v процветать, преуспевать weaken v ослаблять, ослабевать

movement in the exchange rate изменение валютного курса

to leave smb worse off ставить кого-л. в более невыгодное положение imposition of controls введение контроля (ограничений)

capital movements движение капитала interdependence n взаимозависимость

set of arrangements (зд.) совокупность договоренностей (мер, мероприятий) national boundaries государственные границы

pattern n структура, характер, паттерн adjust v регулировать, корректировать to be governed (by) регулироваться

Articles of Agreement устав

is afflicted with problems (зд.) обременена проблемами interdependent adj взаимозависимый

discrepancy n расхождение, противоречие define v определять

reconcile v примирять conflicting adj противоречивый

balance-of-payments position состояние платежного баланса to settle accounts урегулировать счета

in broad terms в широком смысле adjustment n корректировка, исправление

establishment and alteration of exchange rates установление и изменение обменных курсов payments imbalances неравновесие платежей

B. in line with в соответствии с

amount (to) v составлять (сумму), достигать, равняться strategy for adjustment стратегия перестройки

be committed to быть приверженным чему-л.

adjustment program программа перестройки to entail risk повлечь риск experience v испытывать

track record (зд.) достижения, успехи monitoring n мониторинг, контроль question v (зд.) подвергать сомнению wisdom n (зд.) разумность

derail v (зд.) срывать выполнение (программы) duly adv должным образом

exceptionally adv исключительно

favourable treatment (зд.) благоприятные условия in absolute terms в абсолютном выражении

as a percentage (of) в процентном выражении (от)...

quota n квота magnitude n величина

EFF arrangement соглашение о предоставлении расширенного финансирования lending limit кредитный лимит, лимит кредитования одного заемщика

degree n степень

imply v подразумевать, означать irreparably adv непоправимо undermine v подрывать основы

guard (against) v защищать, стоять на страже social safety net система социальной защиты evident adj очевидный, явный

EXERCISES

Ex. 1. Answer these questions:

A.1. In what ways are individuals affected by international monetary developments? 2. What is the international monetary system?

3. What is the international monetary system concerned with?

4. What are the international monetary relations governed by?

5. What are the major international monetary institutions?

6. Is the international monetary system afflicted with problems?

B.1. What facility has been granted to Russia?

2.What is characteristic of all adjustment programmes supported by the IMF?

3.What safeguards have been built into the Russian programme to eliminate its risks?

4.Does the IMF take into account political developments in the countries it supports?

5.Has the EFF been granted to Russia on exceptionally favourable terms?

Ex. 3. Find English equivalents for the following Russian phrases:

A.не будет большим преувеличением сказать; сказываться на людях; пути, по которым передается это воздействие, различны; число вакансий увеличивается; экспорт процветает; конкурировать по ценам и по качеству; изменение валютного курса; введение экспортного контроля; международная валютная система – это совокупность договоренностей, правил, организаций и т.д.; характер взаимоотношений платежных балансов; взаимоотношения регулируются; быть зависимым экономически; определять функции; положение с платежным балансом; корректировка положения с платежным балансом; установление и изменение валютных курсов;

B.в соответствии со стремлением достичь экономической стабильности; руководство привержено реформам; программа перестройки, поддерживаемая МВФ; страны, испытывающие трудности с

платежным балансом; исключить риск; перечень достижений; пересматривать; подвергаться ежемесячному контролю; ставить под сомнение разумность; чрезвычайно выгодные условия; в

абсолютном выражении; подорвать поддержку реформ; это можно сделать только при наличии системы социальной защиты; быть ощутимым (очевидным) для людей.

Ex. 4. Say in a few words what the main text is about. Use the opening phrases from Ex. 4 (Unit 1). Ex. 5. Sum up the content of the main dialogue. Use the phrases from Ex. 5 (Unit 1).

Ex. 6. Read the dialogue, translate the Russian remarks into English and act it out:

Russian: Общеизвестно, что Всемирный Банк имеет одну основную цель – содействовать экономическому и социальному прогрессу в развивающихся странах, помогая им повысить свой жизненный уровень. Вы предоставляете кредиты развивающимся странам для реализации проектов в области образования, здравоохранения, защиты окружающей среды и т.д. Сумма кредитов,

предоставленных Банком в 1998 году, была рекордно высокой. Чем это было вызвано?

Foreigner. The World Bank's lending really jumped to record levels boosted by its support for countries hit by the financial crisis and by the support for social safety nets, I mean social security for the unemployed and pensioners in some countries.

R.: В 1998 году вы также оказывали значительную помощь странам, пострадавшим от ураганов,

наводнений, засух, землетрясений. Используя различные механизмы финансирования, вы помогали восстанавливать дороги, мосты, строить новые школы, больницы, развивать бизнес. Какие финансовые средства вы использовали для этих целей?

F.: We used our own resources, mobilized donor resources, we also worked in tandem with the IMF. R.: Это понятно, вы две родственные организации, созданные после Второй мировой войны для поддержания всей структуры мирового экономического и финансового порядка.

F.: That's right, but there is a great difference between us. The World Bank is an investment bank. The IMF is an association of governments.

R.: Да, те, кто профессионально связаны с МВФ и ВБ, понимают, что в противовес вам главной целью МВФ является достижение экономической стабильности в мире, устойчивого роста, помощь странам, имеющим сложности с платежным балансом. МВФ считает, что необходимым условием этого является упорядоченная валютная система, которая содействует торговле, создает рабочие места, расширяет экономическую активность и поднимает жизненный уровень во всем мире.

F.: I can't agree more with you here.

Ex. 7. Work on vocabulary and grammar.

a)Study the key words of the unit in the dictionary at the back of this book: adjustment, balance of payments, exchange rate, trade, parity, disequilibrium;

b)Think of the verbs that are most commonly used with:

payments, transaction, monitoring, inflation, project, maladjustments, balance, subscription, loans, fiscal issues;

c) Think of the nouns that are most often used with:

to govern, to set up, to found, to establish, to negotiate, to support, to correct, to assist, to draw, to maintain, to relieve, to consult, to repay, to envisage, to stipulate, to specify;

d)Make your own sentences with any five word combinations from (b) and (c).

e)Match the verbs from (a) with the nouns from (b) below:

f) Write out from the main text international words like investor, channel, role, etc. Transcribe them and read aloud.

Ex. 8. a) Supply the articles where necessary.

b)Write down 3-5 questions about the text.

c)Describe the purposes for which the IMF was set up. International Monetary Fund

The International Monetary Fund, an association of governments, was set up on 27th December, 1945, as a result of the Bretton Woods Agreements which were designed to translate the bitter lessons of global depression into ... stable and cooperative international monetary system. The organizational structure of the IMF is set out in its Articles of Agreement, which entered into ... force in December 1945. The goals of...

IMF are to promote international monetary cooperation through a permanent institution; to facilitate the expansion and balanced growth of international trade; to promote exchange stability; to assist in the establishment of a multilateral system of payments in respect of current transactions between members; and to provide members with an opportunity to correct maladjustments in their balance of payments without resorting to measures destructive to national and international prosperity. Over many years the IMF has been directly involved in supporting ... efforts of developing countries to pursue broad structural reforms and achieve sustainable growth. As of August 1, 1994, 179 countries were members of the IMF. Each member government has been set ... quota to be paid into the Fund, payable partly in ... gold and partly in the member's own currency; the quota determines the member's voting power and ... amount of foreign exchange that it may draw from the Fund. A member may purchase foreign exchange, paying its own currency, but ... member must "repurchase" its own currency within three or, at the outside, five years to maintain the balance in the Fund pool. Currencies drawn from the Fund may be used to relieve ... member's balance-of-payments difficulties; the funds may not be used for military purposes or for programmes of economic development. The aim is to assure ... maintenance of fixed exchange rates in the face of short-term fluctuations. Many countries have been helped in this way. Each member undertakes to establish and maintain an agreed par value for its currency, and to consult the Fund on any change in ... initial parity. In addition, the Fund consults with members on their international financial situation and on specific problems as they arise. On request, the Fund furnishes expert missions to advise and assist... governments in working out monetary problems on the spot. In any event, members are kept informed of... latest developments. Policies are laid down by a Board of Governors, representing all members, which normally meets annually. Many of its powers are delegated to a Board of Executive Directors. In recent years, the resources of the Fund have been supplemented by resources of... Group of Ten.

Words you may need:

to be designed быть предназначенным для чего-л. to enter into force вступать в силу

balanced adj сбалансированный multilateral system многосторонняя система in respect of в отношении

to correct maladjustments исправлять диспропорции resort (to) v прибегать к

structural reforms структурные реформы voting power голоса в руководящих органах purchase v покупать

to maintain the balance поддерживать баланс pool n пул

relieve v облегчать fluctuation n колебание

par value валютный паритет, номинал parity n паритет

furnish v (зд.) предоставлять on the spot на месте

lay down v устанавливать, формулировать

Board of Governors Совет управляющих powers n полномочия

delegate v делегировать

Board of Executive Directors Совет исполнительных директоров

Eх. 9. a) Supply the prepositions where necessary.

b)Write down 3-5 questions about the text.

c)Describe the purposes for which the organization was set up. Your Partner EBRD

The EBRD (European Bank for Reconstruction and Development) is a multinational institution set ... with the specific aim of assisting the countries of Central and Eastern Europe to develop into market-oriented economies. Its 59 shareholders include countries from both this region and the rest ... the world, plus the European Community and the European Investment Bank.

The strongest comparative advantage of the Bank relative to other international financial institutions lies in its ability to operate both in the public and private sectors and to have ... its disposal the broadest range and flexibility of financing instruments. The Bank is uniquely equipped in both staff and range of instruments to support the different stages of transition.

Specifically, the EBRD seeks to promote the development of the private sector within these economies ... its investment operations and through the mobilization of foreign and domestic capital. In relation to private commercial banks, the EBRD's main advantages lie in its willingness and ability to bear risk. This allows the Bank to act at the frontier of commercial possibilities. It also shares the project risk ... acting with other private sector entities, such as commercial banks and investment funds, as well as multilateral lenders and