Personal income tax redistribution: new possibilities for fiscal federalism in Russia
Personal income tax redistribution: new possibilities for fiscal federalism in Russia

Author(s): Nadezhda Yashina, Maria Ginzburg, Louisa Chesnokova
Subject(s): Economic history, Economic policy, Government/Political systems, Present Times (2010 - today), Fiscal Politics / Budgeting
Published by: Masarykova univerzita nakladatelství
Keywords: tax redistribution; personal income tax; tax revenues; budget; fiscal federalism;
Summary/Abstract: The purpose of this study is to develop a calculation mechanism for differentiation of personal income tax revenues among three budget levels: Federal, regional and local, instead of currently existing administrative distribution mechanism, which does not take into consideration real economic capacity of the territories. The authors tested the following hypothesis: return of tax revenues differentiation between Federal, regional and local budget levels within the framework of economic model, taking into consideration a number of differentiating criteria, developed with allowances made for regions social and economic indexes, will allow to tie territories taxable capacity with social and economic peculiarities of their development. Methods of factor analysis, timeseries analysis allowed to test the algorithm built for dividing tax revenues, confirming their relevance and significant value. We evaluated each criteria received for 83 regions of the Russian Federation for the period of 2010-2014 and identified the possibility of splitting revenues from personal income tax between the Federal, regional and local budgets. Nizhny Novgorod region, one of the regions of Russian Federation, was taken as an example in the course of study. As the result of this study the authors exposed 4 groups of personal income tax possible distribution among three budget levels. Check-up analysis showed, that the model, offered by the authors of this research for consideration, allows to increase territories tax potential, the level of their own revenues, financial stability of these territories, and it can be used in the countries with federal form of government. Replacement of existing mechanism of tax revenues administrative distribution according to budget levels for differentiating calculation mechanism would create additional incentives for development of the economy in regions, which will encourage the implementation of justice concept in tax assessment.

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