Updating Fixed Production Assets: Incentive Tools

By Merzlova, Maria P. | Asian Social Science, December 2014 | Go to article overview

Updating Fixed Production Assets: Incentive Tools


Merzlova, Maria P., Asian Social Science


Abstract

Based on an analysis of national statistics on the structure and condition fixed production assets of Russian companies identified disparities in the structure of the fixed assets in Russia, as well as a high degree of wear and tear, (about 50%). In the study, the reasons for the poor state of basic production assets and identify opportunities to overcome the problem of low investment activity of domestic enterprises in the modernization of production is determined that one of the main constraints is the current tax system and the associated high cost of investment. Determined that under the tax laws do not give preferences to the expected positive effect, because it does not have a significant impact on reducing the cost of acquisition of machinery and equipment due to the high proportion of it indirect taxes (VAT, duties), which reduces the investment business opportunities at the same time holding back the development of domestic engineering and construction industry, which are created and the basic production assets (active and passive parts of them). As stimulus measures proposed substantial cuts in VAT and duties, and in high-tech equipment in strategic industries - complete their cancellation. Dropping out in connection with this budget revenues at the initial stage may compensate by increasing excise taxes on certain products that are detrimental to public health (alcohol and tobacco), increased taxation on the export of capital.

As a non-tax instruments to promote development of the proposed technical outsourcing (after-sales service of process equipment), the use of which will provide the companies who invest in technological renovation of production, significant cost savings by reducing the costs associated with the content in the state of highly specialized staff and simplify the process of enterprise management. The enterprises of mechanical engineering will be able to sustainable development and establishing long-tenn business relationships with client enterprises.

Keywords: investment, modernization, fiscal instruments, upgrade, equipment, service, promotion, price, structure

1. Introduction

The economic growth of the state, which is based on the development of industrial production, requires constant updating of material and technical base of the industrial enterprises and investment in the sphere of production. Economic refonns that have taken place in the 90s, led to a significant change in the structure of fixed assets in Russia in the total capital stock of the state decreased the proportion of fixed assets in industry, construction and agriculture, significantly increased the proportion of transport and communications. Existing structural imbalances persist (see Figure 1) and significantly reduce the opportunities for economic development.

The continuing trend of reducing the proportion of fixed assets in industry and agriculture in the total capital stock of the state is exacerbated by the high degree of depreciation of fixed assets (Table 1), which has a negative effect on the competitiveness of Russian enterprises.

In the current situation is paramount to develop and implement measures to encourage the process of renewal of the fixed assets and the development of basic industries (engineering, construction), which are the basic production assets (their active and passive parts).

2. Materials and Methods

Study of the problems of development and modernization of production carried out by using the following information database:

- National statistics on the state of the fixed assets in the Russian Federation, the dynamics and structure of investments in fixed assets, production indices of fixed assets;

- Tax law (Tax Code of the Russian Federation, "Main directions of tax policy of the Russian Federation for 2014 and the planning period of 2015 and 2016") with regard to the application of tax incentives and taxation of property, plant and equipment (direct, indirect);

- The results of research conducted by consulting firm for the development of production;

- Materials of scientific conferences;

- Scientific publications on the problems of modernization and development of the investment climate. …

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