Financial and legal institutions as an element of the mechanism for preventing shadow economic phenomena

Samoilova Liudmila Konstantinovna ORCID: 0000-0001-8224-3388 PhD in Economics Associate Professor; Department of Public Law Disciplines; St. Petersburg Institute (branch) of All-Russian State University of Justice (RPA of the Ministry of Justice of Russia) 191014, Russia, Saint Petersburg, Baskov Lane, 16 samoylovalk@mail.ru Other publications by this author

Introduction.

Each economic entity strives to achieve its own goals, choosing a path on which it will have to face the least number of obstacles of various types. At the same time, it is typical for an individual to satisfy a variety of time-varying economic needs, an economic entity is faced with the task of maximizing profit while simultaneously increasing the value of capital invested in its functioning, the interest of public legal entities (the state and its structural units) is reduced to creating a material platform sufficient to perform their assigned functions. It is pointless to deny that the presented goals of these groups of actors are antagonists with respect to each other. The reason lies in their content. Thus, the opportunity to realize economic needs is directly related to the phase of the reproductive cycle – distribution, during which both the size of the future profit of the enterprise and the volume of revenues to the budgets of the budgetary system of the state are established. Within its framework, the part of the funds that will remain at the disposal of economic entities belonging to a particular group is determined. It is obvious that the person who invested capital in order to increase it has a natural intention to return everything that was invested as soon as possible, and in conditions of instability such a desire only increases. At the same time, the owner of capital, for fear of financial losses, often does not disdain any means of preserving it, including illegal ones. In view of this, the economic activity of an economic entity may be accompanied by a number of actions on its part that negatively affect other participants, namely: evasion from registering activities in accordance with legal requirements to avoid tax and other pressure from the regulatory and control mechanism; concealment of certain financial and economic transactions from accounting; deception of employees regarding the remuneration system both during the hiring process and during the subsequent payment of remuneration based on the results of work; fraud in interaction with contractors and clients, and others. But do not forget that employees, seeing a similar attitude towards compliance with the norms of law on the part of the organization, do not neglect alternative ways to expand their own capabilities to meet economic needs, for example, committing theft, agreeing to informal employment to maintain the status of a person in need of state social support, conspiring with the employer about wages "in envelopes" to reduce the burden of taxing their income and others. In such conditions, public law entities take the path of tightening regulatory and control influence, but, as a rule, in the vast majority of cases, bona fide participants in economic activity are subjected to it, and those whose activity was hidden will remain out of the focus of attention of the relevant authorities. To paraphrase the above, the achievement of a goal by one actor is not a guarantee of the realization of the interests of others, which significantly contradicts economic security, which is based on a balance of satisfaction of micro and macro needs.

Economic security is a complex structured phenomenon, but it is undeniable that, directly or indirectly, its provision is based on the sufficiency of funds, since the economic goals facing the actors will always involve certain costs of resources, any of which has a value expression. Moreover, this statement applies to households, business entities, and the state, and therefore, the degree of protection of their economic interests is inextricably linked to financial viability. The attempt of individual participants in economic activity, primarily micro-entities, to hide, to "overshadow" the real volumes of their own financial assets and financial results entails a number of negative consequences for other actors, affecting their economic security. It is worth recognizing that shadow processes definitely affect all subjects of economic relations, but not in the same way. The positive aspect of shadowization is manifested in the reduction of costs associated with compliance with mandatory requirements imposed by regulatory authorities on organizations, individual entrepreneurs, and the self-employed. The negative effect is expressed in a decrease in budget revenues, which causes either a drop in budget expenditures, resulting in cuts in certain allocations, or the search for new sources of budget revenues, which, as a rule, leads to increased fiscal pressure. At the same time, due to the variability of the economic environment, the positive result for those who carry out activities outside the formal sector is "eroded" over time. There is no doubt that the shadow economy poses a threat to the economic security of actors, regardless of their involvement in the process of deforming entrepreneurial and other economic activities. At the same time, the regulatory and control policy implemented by the authorities in the areas of taxation, customs taxation, currency restrictions and others often acts as a factor causing shadow activity. Consequently, the institutions of financial law, with their certain adjustment, can act as instruments for the detenevization of the economy. However, the vast majority of scientific publications do not take into account the "natural" connection of shadow processes with such institutions of financial law as the system of fiscal and parafiscal payments, financial control, monetary restrictions and others, which necessitates determining the expediency of their use in an unchanged or adjusted form to combat the shadowization of economic activity.

Literature review.

The document detailing strategic guidelines in the field of economic security of the Russian Federation explicitly states that the shadow economy, which has engulfed the private and public sectors, poses a threat to the economic interests of the state, society, and the individual, and the fight against it belongs to the main tasks facing the subject of ensuring economic security – the state.

The shadow economy is not unique to developing countries. It is inherent in various types of economic systems at any stage of their development, which determines the importance of studying its causes, types and forms of manifestation, consequences for the state, business entities and households.

In a broad sense, the "gray" economy means all the many types of economic activities carried out bypassing any government regulation and control, fiscal and parafiscal taxation - hidden "in the shadows" ^[29]. But the given position on the content of the category under study is not uniform, many works contain variable judgments regarding the "informal" economy – often the interpretations are not comparable. Thus, the point of view is of particular interest, according to which the "hidden" economy is nothing more than a reaction ^{[7, p. 280]} of microactors to the "inconsistency" of the regulatory and control policy of the state, manifested in excessive pressure on participants in economic activity by increasing administrative, fiscal and other burdens. If the state, represented by regulatory and control bodies, uses techniques that discourage the economic activity of business entities and households (expansion of mandatory requirements, increased tax burden, reduction of support for small and medium-sized businesses, reduction of expenditures on the national economy and social policy, ignoring the personal and social needs of the population), then its "displacement" from the reproductive cycle it becomes an understandable reaction to the growing asymmetry in satisfying public and private economic interests. Ensuring a balance between the needs of macro-, meso- and microactors is a key task of the state as a subject of economic security, therefore, any adjustment of the regulatory and control burden towards tightening should have an economic basis and be compensated as much as possible by protectionist measures aimed at stimulating internal development.

Some researchers pay attention to the dual nature of the shadow economy, which manifests itself through its ability to positively influence production and consumption in conditions of destabilization ^{[25, p. 228]}. Reducing the regulatory and control impact on an organization, an individual entrepreneur, and the self-employed due to the complete or partial concealment of financial and economic results helps to release a certain share of capital (assets) from the pressure of administrative and tax burdens. In a period of instability, such a vector of behavior allows both the producer and the consumer to adapt to economic changes while maintaining the ability to meet their own needs with minimal losses for themselves. Of course, the volume of revenues to the budgets of the budgetary system will decrease, but if regulatory and control pressure is maintained at the pre-crisis level or its increase, the imbalance will only progress, leading to a negative financial result, which in turn will cause a drop in revenues of centralized monetary funds.

Often, the positive effect of shadowization is noted in developing countries ^{[21, p. 56]}, for which the imperfection of both market and regulatory control mechanisms is typical. It is the deformation of economic activity that helps to release internal reserves, and their reinvestment leads to strengthening the position of an economic entity in the market, which over time will allow it to adjust to the existing load.

M.V. Oreshkin and E.I. Makarova reveal the ambiguous nature of the shadow economy through its functions ^{[15, pp. 189-190]}. Some of them carry a destabilizing component, which is undeniable, since it is futile to ignore the consequences of shadowization, which have a destructive effect on economic actors, but under certain conditions (crisis, sanctions pressure, transition period), going "into the shadows" allows you to create a "safety zone" for business entities and households, encouraging them to maintain the previously established the mode of production and consumption, which is extremely important for ensuring the viability of the national economy.

T.V. Prokopyeva and A.S. Yakovleva move away from the dual nature of the shadow economy, considering it exclusively as a negative phenomenon ^{[17, p. 53]}. In many ways, this position of the authors is supported by clarifying the list of negative consequences of shadowization for all groups of economic entities. In addition, T.V. Prokopyeva and A.S. Yakovleva focus on prohibited activities, putting crime and an attempt to avoid excessive administrative, tax and other pressure caused by the imperfection of the regulatory and control policy of the state on a par.

A similar train of thought is contained in the work of I.V. Petrov and A.A. Balabanov. Thus, they identify the following concepts: "hidden economy", "underground economy", "illegal economy", generally defining them through activities that do not fall under legislative regulation, implemented outside of it ^{[16, p. 46]}. However, it is impractical to equate the "gray" and "black" economies. If the existence of the first is due to excessive influence on participants in economic relations by public authorities, then the second is generated by the desire to make a profit as a result of illegal activities (drug trafficking, arms trafficking, trafficking, prostitution, etc.) that harm personal and public safety.

A similar position can be seen in the publication of A.A. Sayakbayeva and G.A. Jorobekova. They present a point of view on the analyzed term, on the one hand, which boils down to its connection with public finance, on the other hand, it does not distinguish between the legality and illegality of microactors derived from state administration of income. In their opinion, the shadow economy is money that has not been received as a result of concealment in the budgets of the state budget system ^{[20, p. 274]}. It should be noted that in the Russian Federation there is a state monopoly on certain types of activities, for example, in the sphere of trafficking in narcotic and psychotropic substances. The illegal participation of private individuals in such turnover belongs to the "black" rather than the "gray" economy and has more serious consequences not only for economic, but also for national security in general.

O.S. Ziberova speaks about the scale of this phenomenon, since it covers all spheres of life of the state, society, and the individual. Moreover, adhering to the same line as a number of the above-mentioned researchers, the inconsistency of the shadow economy is denied, since, according to O.S. Ziberova, its goal is solely to legalize proceeds from crime ^{[10, p. 70]}. But referring to the provisions of criminal, administrative, civil, and tax legislation, not everything that is hidden from accounting is an illegal act. In confirmation of this, it is worth contacting the institute of the "self-employed": it is obvious that the lack of elaboration of previously existing tax regimes, the presence of gaps and conflicts in regulatory documentation, led to the permissibility of carrying out financial and economic activities outside the official economy sector. In turn, the introduction of a tax on professional income allowed a significant number of participants in economic relations to come out of the shadows and continue to carry out the same types of legal activities, but within the legal space.

According to a number of authors, the shadow economy has the following characteristics: economic activity that has been removed from the regulatory and control mechanisms; it is unacceptable to include illegal activities in its composition ^[28]. Categories such as the "black" economy, the "black" market, and "black" finance are associated with the criminalization of the national economy, while they are not generally recognized as its structural elements ^{[3, p. 110]}.

Summarizing the above, it can be noted that the shadow economy is a complex economic phenomenon with a high degree of coverage of various institutions of the state and society, the appearance of which is due to their vulnerability due to the imbalance of public and private interests ^{[3, p. 104]}.

Based on the presented approaches to the interpretation of the definition of "shadow economy", it is not permissible to consider this phenomenon exclusively as negatively colored. It can be generated both by the shortcomings of the current type of economic system, and by the understandable desire of business entities and households to increase incomes by reducing costs caused by the implemented regulatory and control policy in the state, which is especially pronounced during a period of instability.

The discrepancy between private and public interests, insufficient openness and transparency of budgetary activities at the macro and meso levels, the lack of an appropriate economic basis for changing the tax system lead to the activation of shadow processes in the economy, therefore, the causes of the origin and scaling of this phenomenon are variable over time. For example, within the framework of the command and administrative economy, shadowization was associated with the inability, until the mid-1980s, for individuals to legally carry out certain types of entrepreneurial activity, excluding the sphere of handicrafts. A person who is aware of the relationship between supply and demand, expressed, on the one hand, in meeting the needs of the consumer, on the other – in the opportunity to realize entrepreneurial potential, simultaneously increasing their income, became a participant in informal economic relations. In such conditions, there was a direct relationship between the degree of entrepreneurial activity and the level of shadow economy.

Another situation has developed with the recognition of private property: it would seem that individual entrepreneurship has been legalized, but the owners of business entities seek to conceal the scale and results of their activities. Such behavior is caused by the limited capacity of the State to participate in the reproductive cycle. Apart from state monopolies, in general, it is involved in the distribution phase, within which, through fiscal and parafiscal taxation instruments, it accumulates funds in the budget system necessary for the implementation of its tasks and functions. Meanwhile, the state, like any actor, functions in an ever-changing environment: development goals are being updated, qualitatively new threats and challenges arise. All this requires a sufficient amount of resources, including financial ones. The transformation of the tax system towards an increased tax burden, expressed in an increase in the number of taxes, a change in the approach to calculating the tax base, an increase in tax rates, and the abolition of tax benefits, is traditionally used to increase budget revenues. However, when the fiscal burden becomes excessive, shadow processes in the economy grow. Thus, the root causes of shadowization are different.

The scientific publications present heterogeneous opinions regarding the motivating factors of the emergence and subsequent spread of the shadow economy. E.A. Yekhlakova provides a list of reasons provoking the deformation of economic activity, without any systematization of them ^{[9, pp. 70-71]}. However, all of them, from her point of view, are reduced to certain shortcomings of regulatory and control mechanisms. At the same time, the author focuses on the size of the business entity, pointing out the relationship between the number of financial and economic transactions and the amount of burden faced by the enterprise. However, the regulatory and control impact is also due to the peculiarities of the implemented economic policy in the state. The connection between the involvement of an organization in the process of going "into the shadows" and the scale of its internal turnover, which E.A. Yekhlakova sees, is obvious at first glance. In an attempt to overcome administrative barriers and reduce fiscal pressure, microactors are withdrawing both individual transactions and entire areas of financial and economic activity from the "formal" sector of the economy. Often, this approach is associated with an increase in corruption activity, which only deepens the involvement of various individuals in shadowization. But this position is inherent, as a rule, either at the stage of creation and subsequent consolidation of the organization in the business environment, or with increasing economic instability, when the business entity is disoriented in the system of economic relations. In normotypic conditions, microactors tend to carry out their activities without violating the mandatory requirements imposed on them, since the external and internal environment functions as planned, and administrative and other loads do not exceed the usual limits.

B.Y. Abdullayeva and N. Zhuraeva also highlight among the causes of shadowization the imperfection of public regulatory and control measures applied to representatives of the business community, most often progressing with low legal literacy of entrepreneurs ^{[1, pp. 69-70]}.

The article by E.V. Kharlamova lists the factors of deformalization of entrepreneurship, which are exclusively economic in nature ^{[26, pp. 17-18]}. The material well-being of any actor allows him to achieve the whole set of goals and objectives facing him. The need to increase assets is natural – it does not contradict the interests of an economic entity. Its achievement is also possible by reducing costs, primarily irrational from the point of view of participants in economic relations (producers, consumers, intermediaries). These include the whole set of fiscal and parafiscal payments, the transparency of which is insufficient. Such a situation leads to the avoidance of the payer from fulfilling the obligation, including by hiding the scale and results of financial and economic activities. And in the case of disproportionate punishment for the committed act, the possibility of avoiding it partially or completely, such a format of behavior becomes conscious. In other words, economic reasons, reinforced by impunity for certain actions (inaction), clearly act as a factor of shadowization. A similar position is held by D.A. Nikolaev ^{[14, p. 182]}, who identifies two reasons for the spread of shadow phenomena: the first is an excessive tax burden that reduces the viability of the organization; the second is low–quality administration by regulatory and control bodies. In fact, both of them are in close connection: due to the presence of flaws, regulatory and control mechanisms do not meet various needs of the state, including the need for funds necessary to implement the tasks and functions assigned to it, which leads to a change in the tax system towards its expansion, and consequently to an increase in tax pressure.

D.V. Timirshina and L.A. Mizyurkina in their work presented the systematization of "impulses" provoking the withdrawal of economic activity beyond the "formal" sector. In addition to economic and legal reasons, such as anthropological, social, ethical, and political ones are mentioned ^{[24, pp. 162-163]}. It is worth noting that most of them are due to the contradiction between private and public interests typical for various economic systems.

D.I. Ramazanov and T.A. Cherkashina divide all the variety of causes of shadowization, refraining from specifying them, into two blocks: fundamental ones – stem from the type of economic system entrenched in the state; specific ones – are the result of socio-economic policy implemented by public legal entities ^{[18, p. 194]}. Since macroeconomic policy directly depends on the type of economic system, it is appropriate to combine the factors that serve as a prerequisite for the activation of shadow processes into the following enlarged groups: primary and secondary (derivatives).

So, the presence of a large number of factors-motives for the shadowization of economic activity confirms the ambivalence of this phenomenon. On the one hand, the shadow economy causes direct or indirect damage to macro-, meso- and microactors, on the other hand, it acts as a "protective" mechanism aimed at maintaining the viability of economic entities and households in conditions of destabilization. The abundance of reasons for the deformation of entrepreneurship determines the availability of complex tools to prevent it.

The means and methods of tracking shadow processes are divided into direct and indirect. S.S. Kuprina and O.N. Golovinov direct methods include the collection and analysis of not only administrative information, but also received as a result of sociological surveys. Indirect ones are reduced to comparing different data, while deviations between them may indicate the prevalence of shadow phenomena ^{[12, p. 57]}.

Other authors have a similar opinion. Thus, N.N. Makarova and E.L. Fesina point out the importance of evaluating information obtained during control and supervisory activities, primarily desk and field tax audits ^{[13, p. 79]}. However, the introduction of a moratorium on inspections of representatives of small and medium-sized businesses acts as a negative aspect, which allows them to hide income and assets, avoiding responsibility. L.H. Botasheva and K.S. Sargsyan isolate balance sheet methods in the structure of indirect methods, the main purpose of which is to detect discrepancies between interrelated indicators ^{[6, p. 32]}. M.I. Berkovich, S.V. Bozhenko, A.A. Shurygin call the previously designated groups of methods differently: direct – micromethods, indirect – macromethods ^{[5, pp. 29-30]}. Such fragmentation is dictated by the specifics of obtaining information used to assess the scale of shadowization.

As you can see, most researchers have the same point of view on the grouping of methods for assessing the shadow economy. However, the situation is different with regard to the tools themselves for countering shadow phenomena – various studies reveal their list, while there is no classification of them.

For example, E.S. Tarapatina and V.A. Litvinenko specify the list of measures aimed at combating the shadow economy ^{[23, p. 48]}. Most of them are related to a change in the course of public administration in the financial sector: adjusting the tax system in order to ensure fair taxation; discouraging cash payments; providing assistance to microactors who carry out their economic activities openly. E.A. Yuneva and I.A. Avdeeva assign a special place to tax among a variety of measures ^{[27, p. 38]}, moreover, the emphasis is solely on tightening regulatory and control measures in order to exclude any opportunities for tax evasion, regardless of the directions and scope of the organization's activities. O.S. Kolesnikova in her research indicates the prospects not so much of increasing the tax burden, but of expanding tax administration through careful monitoring of a large number of taxpayers - organizations and individuals persons ^{[11, p. 2351]}. V.I. Aleshnikova and T.A. Burtseva also call digitalization of certain public relations as a promising direction ^{[2, p. 30]}, through which the processes of tracking cash flows, monitoring foreign trade transactions, identifying and searching for non-payers of mandatory payments are simplified.

A.S. Sitkov believes that actions to prevent shadow activity among business entities and households should be based on the principle of balance – one cannot use only stimulating or discouraging measures, they must be harmoniously combined ^{[22, p. 218]}.

Based on the analysis of the experience of various countries in the field of economic detenevization, E.V. Voronina and V.V. Cherepanov combine the means and methods used to motivate entrepreneurs to refuse to "mask" income from regulatory and control bodies into groups: legal, economic, social ^{[8, p. 12]}. However, not all techniques included in a particular group are motivating, some even perform the opposite function. A measure aimed at supporting organizations in the banking sector is particularly questionable (it was actively used during the crises of 2020 and 2022). Giving preference to banks among the many economic entities in need of financing, the regulator uses a form of indirect assistance in the field of production, sale of goods, works, services, which loses its position relative to direct assistance. In such circumstances, do not forget that the main purpose of banking is to make a profit, so their interest in low-risk and high-yield operations is natural. At the same time, it is the credit risk for banks that is significant, and the return on lending is significantly lower than from transactions with securities, currency and other financial instruments. On the part of representatives of the spheres of production and trade, such a measure is unlikely to be considered as a stimulating factor in getting out of the shadows. In this regard, when developing a set of tools for the detenevization of entrepreneurship, it is reasonable not only to combine various techniques in terms of content, but also to scrupulously determine the composition of subjects to which certain measures will be applied.

In conditions of instability, the means and methods of preventing shadow processes should be "soft" in nature, not increasing the burden on participants in economic relations, as evidenced by previously presented works indicating the positive nature of the shadow economy. In this case, it acts as a "shock absorber" with excessive regulatory and control pressure on microactors ^{[3, p. 98]}. A similar position is confirmed by the Russian experience from the implementation of a number of measures during the pandemic: reducing the maximum amount of contributions to extra-budgetary funds by half for certain types of enterprises led to a massive "whitewashing" of salaries of employees of these business entities.

But, unfortunately, most of the tools are aimed at strengthening the regulatory and control impact. Thus, not only in-house, but also on-site tax audits began to be actively applied to individuals, which is confirmed by regulatory documentation (Letter of the Ministry of Finance of the Russian Federation dated 08/31/2017 No. 03-02-08/55972). Also, the techniques often used by the regulator cause the spread of deformalization of economic activity. A striking example is the extremely contradictory situation that developed in 2022-2024: in the Russian Federation, a ban was imposed on routine inspections of business representatives in order to reduce their administrative burden, while at the same time a new tax on excess profits was introduced – the inability to implement the prevention of certain offenses, including tax ones, through control led to the need to expand fiscal pressure to individual business entities to compensate for the loss of budget revenues. All this confirms the need for an urgent rotation of detenevization tools. It is impractical to talk about any special means of preventing shadow phenomena in 2022-2024, since economic sanctions are not something new for the national economy - the first steps aimed at eliminating the consequences of sanctions pressure were taken and tested back in 2014. Regardless of the scale of the anti-Russian sanctions, the regulator's "view" should be focused on the interests of domestic micro-entities, otherwise it will not be possible to avoid shadowization.

Generalizing, the multiplicity of methods of combating the shadow economy is due to the fact that the causes of it are different, therefore, the elimination of each of them requires the use of special tools and techniques. At the same time, the vast majority of authors speak of the need to use an integrated approach in countering the facts of the deformation of economic activity ^{[4, p. 191]}. However, it is worth noting that among a large number of publications there are no positions revealing the expediency of using financial law institutions to reduce the scale of shadowization, although it is the high tax burden and lack of proper transparency of budget expenditures that often become an impulse to conceal their own income by microeconomic entities. In this regard, this study boils down to substantiating the need to include financial law institutions in the mechanism of combating shadow processes.

Materials and methods.

Among the research methods, it is worth isolating the method of generalizing indicators based on the analysis of absolute and relative statistical values (indicators), which made it possible to form a judgment on the financial and economic condition of both public and private economic entities in the context of Russian regions.

In the study of private finance, it is appropriate to focus on indicators that reveal the material well–being of the population (income, expenses, deposits, loan arrears, as well as their ratio), since it affects entrepreneurial activity - without effective demand, increasing supply is impractical. The lack of funds to meet the needs of individuals leads to a reduction in consumption or the search for alternative goods, usually in a lower price category, which encourages the business sector to change its approach to production. So, organizations have a choice:

- to use various kinds of innovations in order to save on costs, which is associated with large expenditures at the implementation stage and a long payback period for resource-saving and other advanced technologies;

- to maintain the price range by adjusting the qualitative and quantitative characteristics of the product being created by using low-grade raw materials, reducing the volume of a unit of production;

- avoid registering the scope and results of their activities in order to reduce the tax, administrative and other burden.

The chosen vector of development of the organization as a whole depends on the macroeconomic situation – in case of destabilization, the implementation of financially costly measures is unjustified.

So, business entities carry out their activities solely taking into account the solvency of consumers. It is also important to remember that the costs associated with the fulfillment of mandatory requirements by regulatory and control authorities are included in the cost of production, and therefore, are reflected in its price and the subsequent opportunity to purchase the goods produced by the person in whose interests it was manufactured, which generates a desire for the entrepreneur to go "into the shadows".

To describe the financial situation of enterprises, indicators have been chosen, in fact, reflecting the effectiveness of their activities – the share of unprofitable organizations, the balanced financial result.

When characterizing public finance, emphasis is placed on certain types of income (tax pressure) and expenditures (investments in the economy) of budgets. The selection of these indicators is due to the reversible processes in the field of budgetary activity of the state:

- the effect of the "tax pit" – excessive fiscal burden leads to the termination of entrepreneurial activity or to its shadowization, which provokes a drop in budget revenues. The next "relatively simple" step is to tighten tax policy in order to compensate for budget losses, which only contributes to an increase in distrust of the regulatory and control mechanisms of the state and aggravation of the processes of economic deformation;

- a change in the "roles" in the reproduction cycle, in which the state participates not only in the distribution stage, accumulating all the set of mandatory payments in the budget system, but also in the production stage – acting as a key investor. Financial support for entrepreneurship is implemented through public investments, expenditures, and subsidies, which allows business entities to build their activities if there is a reliable support in the person of macro- and mesoactors. The protectionist policy stimulates the economic activity of both producers and consumers, which generally has a positive effect on the amount of tax and a number of non-tax revenues of the budgets of the budgetary system.

In total, the analysis of the totality of these absolute and relative statistical values is aimed at forming an idea of the processes inherent in the sphere of private and public finance in the Russian Federation. Previously, such a set of indicators was not used for the indirect assessment of shadow economic phenomena, as well as proper attention was not paid to the use of financial law institutions in the fight against the shadowization of the economy. The presented approach is aimed at substantiating the possibility of preventing shadow phenomena by adjusting certain provisions of financial legislation and restructuring specific institutions of financial law.

Results.

To disclose the relationship between private and public finance, it is necessary to analyze information revealing the financial position of the following groups of actors: the state (its administrative-territorial units – regions), business entities and households (Tables 1-3).

Table 1 shows the values of indicators characterizing the financial situation of the population in the subjects of the federation in dynamics over five years (from 2018 to 2022). To determine the leading regions (outsiders) for each of the indicators, a partial ranking of the subjects of the federation was implemented (1st place was assigned to the territory where the indicator value was the best, 85th place was the worst), then the average rank for five years was calculated.

Table 1. Indicators characterizing the cash flow of the population (in dynamics) ^[19]

The data presented in Table 1 indicate intermittent dynamics – the values of the indicators in 2020 and 2022 differ significantly. It should be noted that due to restrictions on certain types of economic activity during the pandemic and the price spike caused, among other things, by the expansion of sanctions, average per capita spending grew more slowly than average per capita income – deferred demand was recorded. In other years, the growth rate of personal expenses, including for paid services, is more active, which may indicate a low ability of the population to save. In addition, high inflation (a critical value of 4% per year is the goal of the Central Bank of the Russian Federation for this indicator) leads to a decrease in the purchasing power of the national currency, in such conditions, interest in savings decreases. The share of mandatory payments, although not significantly, is still growing, which only limits the ability of households to implement economic requests. It is also worth noting that in 58% of regions (for 2022) there is a negative proportion of indicators characterizing the financial independence of individuals. In 2018, their number was less than 32%. Taken together, these indicators confirm the existence of adverse processes in the field of private finance. In view of this, any changes in the fiscal burden will only negatively affect the degree of satisfaction of individuals' needs, which may provoke an increase in the shadowization of their incomes.

To form a judgment on the financial self-sufficiency of business entities, the indicators shown in table 2 were calculated.

Table 2. Indicators describing the effectiveness of organizations (in dynamics) ^[19]

The values of indicators that can be used to identify the financial position of organizations as positive or negative demonstrate the unevenness of economic activity in the subjects of the federation: for some, a high positive financial result of organizations is typical, although changing in conditions of instability, for others it is permanently negative. The share of unprofitable organizations also varies significantly in the regions. The variability of the calculated parameters indicates that environmental changes caused by certain economic, social, and political events have a clear impact on the functioning of economic entities, which requires them to make efforts to adapt to fluctuations. For this reason, additional pressure from regulators leads, as a rule, to a transition to appropriate patterns of behavior – the winding down (closing) of a business, hiding the scale and results of entrepreneurship in order to reduce the tax burden.

The indicators revealing the peculiarities of the processes in the field of public finance are presented in Table 3.

Table 3. Indicators reflecting the state of public finances (in dynamics) ^[19]

As mentioned earlier, there is a close relationship between private and public finance, which is embodied by the dynamics of the first indicator in Table 3 – the decline in economic activity of households and business entities in 2020 and 2022 led to a decrease in the volume of individual tax revenues to the revenue side of budgets. It is noteworthy that spending on the economy as a whole in the Russian Federation in the context of large-scale pandemic restrictions increased compared to the previous period, but not significantly. The lack of support for the real sector of the economy may well cause an obvious reaction from entrepreneurs – hiding the results of their activities.

It is important to emphasize that the possibility of financial assistance from the budgets of the budgetary system directly depends on their balance, however, which can be achieved, among other things, by reducing budget allocations for various purposes. At the same time, long periods of surplus make it possible not only to form reserves to eliminate the consequences of economically dangerous situations (crises, conflicts) when they arise, but also to positively adjust the structure of budget expenditures of the budgetary system in the future towards increasing payments to recipients. In 2020 and 2022, the number of regions with budget deficits increased significantly (in 2018, there were about 8% of the total, whereas in 2020 there were already more than 25%, and in 2022 – more than 28%. The imbalance of budgets indicates their financial dependence, to combat which the authorities often resort to increased fiscal, administrative and other pressure. This approach, which overlaps with the financial insolvency of microactors, is an impulse to shadow economic activity.

During the analysis of the data presented in tables 1-3, based on the induction method, it can be concluded that there is a connection between the financial position of macro-, meso- and microeconomic entities, therefore any changes in the financial behavior of each of the groups of acts will affect the others. The build-up of administrative, fiscal and other pressure causes business entities and households to hide the financial results of their activities, as well as the opposite is true: the state, receiving less budget revenues, expands the system of mandatory payments.

Discussion.

Due to the fact that the shadow economy is difficult to formalize, and the causes that cause it are diverse, the prevention of shadow phenomena requires a special approach based on the use of different types of tools. In view of this, it is appropriate to consider the possibility of including in the list of means to combat the shadowization of financial law institutions.

Financial law is aimed at streamlining public relations in the field of public finance, the participants of which on the one hand are the state and its administrative-territorial units (the influencing entity), on the other – organizations and individuals (subordinate entity). It should be noted that these groups of subjects are interconnected, interacting, and interdependent. The behavior of some within the framework of financial relations directly or indirectly affects others. In addition, financial legal relations are characterized by conflict due to the discrepancy between private and public interests. Considering the above, it is important to assess the impact of the transformation of financial law institutions on shadow processes.

The key area of financial activity of public legal entities is related to the formation, distribution and use of budgetary funds. In turn, fiscal payments are the main source of budget revenues, therefore, regulation and control of taxation are of particular importance for the state. However, for taxpayers, the vast majority of fiscal payments are not associated with individual compensation. It is obvious that taxes are the material basis for the implementation of tasks and functions by the state and municipalities, therefore it is impossible to deny the existence of public retribution. But since the effect of the implementation of certain public events is not always visible to a specific taxpayer due to the lack of individual compensation, a conflict arises between the financial interests of the state, society, and the individual. In this regard, it is necessary to pay attention to some aspects of budget legislation. Thus, article 28 of the Budget Code of the Russian Federation (BC RF) mentions a number of principles aimed at disclosing the importance of accumulated funds in the budget system for a wide range of people. According to the principle of transparency (openness), all information on the movement of budget funds should be publicly available. The search for it is an independent initiative of citizens. However, due to low financial literacy, the activity of the population in tracking income and expenditures of budgets of various levels is minimal. It is worth noting that this principle has replaced the principle of publicity, its difference is reduced to the disclosure and communication of information about the budgetary activities of the state and municipalities through various media. Thus, despite the fact that information on the movement of budget funds is open, it is not possible for most to assess the feasibility of operations due to the lack of necessary knowledge about public finance. Based on the above, the timeliness of the amendment of Article 28 of the BC of the Russian Federation, which is to consolidate the principle of citizen participation in the budget process, is evident. This provision was introduced into the BC of the Russian Federation at the end of 2021. Undoubtedly, the involvement of citizens in the budget process will have a positive impact on understanding the essence of public finance. However, this is the only principle among others listed in Chapter 5 of the BC of the Russian Federation, which is not disclosed in its separate article. Consequently, it can be stated that there is no regulation of the procedure for citizens' participation in the budget process, which only discredits in the public consciousness not only this principle, but also the principle of transparency (openness). Also noteworthy is such an institution as the participatory budget, which is directly related to these principles. This model is being successfully implemented abroad, in the Russian Federation, in some regions, participatory budgeting is at the stage of pilot projects. At the same time, the number of people who are aware of the opportunity to participate in the discussion of budget expenditures (regional and local levels) is insignificant. As a result, smoothing out the conflict between public and private financial interests is unattainable. So, it is important to adjust the provisions of the budget legislation by clarifying the procedure for citizens' participation in the budget process. Regarding the participatory budget model, it should become a priority first of all at the local level, since it is the residents of the municipality who are aware of the pressing problems of the location and directly feel the effect of the implementation of specific measures financed from budgetary funds. In addition, a clear understanding of the spending directions of centralized monetary funds will lead to a conscious fulfillment of tax obligations and rejection of the shadow economy among the masses.

Similarly, the institutions of tax law need to be transformed. The increasing tax pressure in the extremely difficult economic conditions prevailing in the Russian Federation will become a factor provoking an increase in shadowization. Therefore, it is reasonable to redirect the vector of accumulation of budget revenues towards non-tax payments, namely fines for violation of legislation. For example, fines imposed for certain administrative offenses involving individuals are often not levied due to the difficulty of tracking the fact of an illegal act. However, in the context of digitalization, the prospects of which were discussed by V.I. Aleshnikova and T.A. Burtseva ^{[2, p. 30]}, it is possible to bring to justice persons who violate the requirements of legislation on responsible treatment of pets, anti-smoking and anti-alcohol legal norms and others. It is necessary to note the successful experience of bringing car owners to justice for violations of traffic rules, but the actions of pedestrians and persons using personal mobility equipment remain outside the legal influence in this area.

At the same time, refusing to increase the tax burden, it is necessary to strengthen tax control over taxpayers, including individuals, as O.S. Kolesnikova pointed out ^{[11, p. 2351]}. It has become easier to detect discrepancies between income and expenses of citizens in the context of interdepartmental electronic information exchange. In addition, it is necessary to establish uninterrupted provision of information by banks to the tax authorities on the opening of bank deposits by individuals in order to identify hidden income from the latter. In addition, the on-site tax audit of individuals should become an actively used tool.

The regulation of settlement relations also requires modification. The legislation (Instruction of the Bank of Russia dated December 09, 2019 No. 5348-U "On Cash Settlement Rules") establishes restrictions on cash settlements with the participation of organizations and individual entrepreneurs, there are no such reservations for individuals if they participate in settlements not related to their entrepreneurial activities. At the same time, based on the principles of banking established by the Central Bank of the Russian Federation, only non-cash payments are subject to close control. The absence of restrictions on participation in cash circulation for citizens negates efforts to combat the shadow economy. A new form of money, digital, also deserves attention. Its advantages in the context of the de-deneutization of the economy are beyond doubt. A distinctive feature of the digital currency is "labeling", which is important when making transactions with public finances in order not to violate the principle of targeting the targeted nature of budget expenditures. But the transition of microactors to digital calculations, which, as well as impersonal, are more controlled, will have a positive impact on the results of the fight against the deformation of economic activity. To promote this form of money "to the masses", incentives should be used, including financial ones, for example, zeroing acquiring rates for organizations.

Conclusions.

The study established an undeniable relationship between public and private finance. The dependence of the financial position of some actors on the economic decisions made by others leads to an alternate restructuring of the format of behavior of macro-, meso- and microsubjects, which is due to their "natural" desire to satisfy many of their needs. It is worth noting that the state, represented by regulatory and control bodies, actively applies measures primarily aimed at ensuring the balance of centralized monetary funds, coupled with the introduction of new fiscal and parafiscal payments while simultaneously restraining or reducing certain groups of budget expenditures, usually of an economic and social nature. On the part of microeconomic entities, this position is frowned upon, reinforced by the discrepancy between private and public interests in the field of finance. In view of this, business entities and households resort to the deformation of economic activity, hoping to reduce the burden of mandatory payments. And it is the state that has the opportunity to correct this contradiction, including through the modification of a number of financial law institutions.

Thus, guided by the method of deduction, as a result of the analysis of the provisions of financial legislation, it is possible to make a judgment on the availability of opportunities for the application of financial law institutions to prevent the processes of shadowization of economic activity. It is advisable to use them as incentives to bring assets, incomes of organizations and individuals "out of the shadows". However, it is impossible to focus solely on increasing tax, administrative and other burdens, for example: through expanding control over certain types of financial transactions or actors; through changing the approach to calculating the tax base, leading to its growth, including as a result of modification of the object of taxation (since 2015 for corporate property tax and tax the tax base for the property of individuals is determined in a new way - the inventory value of the property has been replaced by the market value, which is significantly higher than the first one), the abolition of benefits. A system of measures should be built to limit the negative impact on participants in economic relations. It is precisely the balance between repressive and rehabilitative methods in favor of the latter that will reduce the need for business entities and households to hide from regulatory and control influences.