Economic Incentives Funds, the finances of cost-accounting socialist enterprises formed primarily from the deductions from profits and intended to materially encourage higher work indices. In the Soviet Union, there are three funds: the material incentive fund, the socio-cultural and housing fund, and the production development fund. The fund-forming indices and the rate of deductions from profits to the economic incentives funds are set for production enterprises by top-level organisations. To encourage the economic initiative of work collectives and make them more interested in the results of their work, the 1979 resolution of the CC CPSU and the USSR Council of Ministers on improving the economic mechanism plans to form during the llth five-year plan period (1981-1985) the economic incentives funds on the basis of stable rates approved and differentiated over the years of the plan 105 period. Rates are set with consideration of the qualitative indices of the work of associations (enterprises). Higher rates of the formation of the economic incentives funds are set for production associations (enterprises) which considerably increase the output of highly effective new machines and plant, and of new consumer items. The management of the association ( enterprise) and the trade union committee together determine the concrete ways these funds will be spent. Work collectives actively discuss and decide how finances intended for the development of production and for socio-cultural endeavours, housing and material encouragement will be used. The money from these funds is used strictly as intended. Any unspent money is transferred to the next year and not withdrawn. When associations (enterprises) adopt and fulfill counter plans exceeding five-year plan targets calculated for the current year, the rate of deductions to the fund is higher, but if five-year plan targets in fund-forming indicators are not filfilled—deductions are lower. The material incentive fund (MIF) is formed from profits accruing from higher labour productivity, higher quality products (or from any other indicator set for the given branch) and the fulfilment of the plan for deliveries to purchasers in accordance with economic agreements (orders). In certain branches, this fund is formed on the basis of other qualitative indicators too: economical use of material reserves, a higher output-asset ratio, shift index of plant and profitability of production, and a lower cost of product, and in the extracting branches—on the output increase in natural units of measurement. Deductions are made according to rates calculated in a percentage of the profit (rated profit), and in certain branches, of the wage fund of the base year of the five-year plan. The absolute sum deducted for MIF increases or falls depending on the fulfilment of the delivery plans according to the range of goods and terms in accordance with the economic agreements (orders). MIF is used to encourage workers to achieve the set indicators, providing them with bonuses for high annual results, as well as lump-sum grants. Industrial workers, managerial staff, engineers, technicians and office workers are given bonuses from MIF in accordance with the set bonus systems. Lump-sum grants are given for fulfilling especially important assignments in improving production, introducing new machines, etc. MIF is also used to reward workers for the results of emulation within the enterprise. The socio-cultural and housing fund amounts to 30-50 per cent of MIF. Part of MIF money can also be used for these purposes. The money in the sociocultural fund is used to satisfy the collective’s social requirements: building, expansion and major repairs of houses, preschool establishments, preventive medical centres, canteens, etc., and also to help build cultural and service facilities. Heads of associations, enterprises and organisations are granted the right, following agreement with the trade union committee and with due consideration of the recommendations of work collectives, to use MIF money for providing non- refundable material aid and for the partial repayment of the bank credit for cooperative and individual housing extended to workers with a record of work at an association, enterprise or organisation of at least five years, and to newlyweds, of at least two years. When the worker leaves the enterprise on his own without valid reason or is dismissed for violating work discipline the non-refundable aid or money to pay off bank credit must be returned within five years. The production development fund is formed by deductions from the profit set at a certain rate, depreciation deductions intended for the complete renewal of fixed assets, and finances from sales of superfluous machines and plant (fixed assets). This fund is used for mechanisation and automation, replacement and upgrading of plant and equipment, improving the organisation of production and work, and also on other initiatives involving the technological refitting of production. The cost of the abovementioned undertakings are fully included in the capital construction plans of the ministries and departments, which provide 106 the necessary capital investment, material resources and contract work. Undertakings which become necessary when fulfilling the annual plan are financed from the unused part of the production development fund and extra-plan deductions to this fund. The procedure is similar for the initiatives financed from the socio-cultural and housing fund.