Sectoral determinants of sub-federal budget tax revenues: Russian case study
DOI:
https://doi.org/10.24136/eq.2019.011Keywords:
sub-federal budgets, tax revenues, sectoral structure of economy, level of tax absorption, inter-regional inequalityAbstract
Research background: The research is based on the assumption that the sectoral structure of economy has a significant impact on the level and dynamics of sub-federal budget tax revenues. It distinguishes the following sectoral determinants of tax revenues in regions: the levels of tax return and tax absorption, inflation and economic growth in various economic activities.
Purpose of the article: We aimed at assessment of contribution of economic activities and their determinants to the increase in tax revenues of sub-federal budgets of the Russian Federation in 2011?2015 compared to 2006?2010.
Methods: Development of a four-factor additive-multiplicative model of the tax revenue formation in regions, application of the proportional and logarithm methods of factor analysis to assessment of contribution of various activities and their determinants to increase in tax revenues of sub-federal budgets, evaluation of inter-regional inequality of tax revenues growth based on the weighted coefficient of variation, and decomposition of this inequality using the A. Shorrocks technique.
Findings & Value added: We identified activities that made the largest contribution to the increase in tax revenues of the Russian sub-federal budgets. We found that the inflation factor had a predominant positive effect on the growth of tax revenues, while the contribution of the economic growth factor was 4 times less; however, the situation in various activities differed significantly. Generally, changes of sectoral levels of tax return and tax absorption influenced negatively the regional tax revenues. In addition, they moved in opposite direction in the regions. Ultimately, the uneven change in tax returns and price levels in the mining and manufacturing activities of Russian regions made the greatest contribution to inter-regional inequality of the growth of sub-federal budgets tax revenues.
Downloads
References
Andrejovská, A., & Puliková, V. (2018). Tax revenues in the context of economic determinants. Montenegrin Journal of Economics, 14(1). doi: 10.14254/1800-5845/2018.14-1.10. DOI: https://doi.org/10.14254/1800-5845/2018.14-1.10
View in Google Scholar
Bizioli, G., & Sacchetto, C. (Eds). (2011). Tax aspects of fiscal federalism: a comparative analysis. Netherlands: IBFD.
View in Google Scholar
Braun, B. M., & Otsuka, Y. (1998). The effects of economic conditions and tax structures on state tax revenue flow. IAER, 4(3). doi: 10.1007/BF02294895. DOI: https://doi.org/10.1007/BF02294895
View in Google Scholar
Carrol, D. (2009). Diversifying municipal government revenue structures: fiscal illusion or instability? Public Budgeting and Finance, 29(1). doi: 10.1111/j. 1540-5850.2009.00922.x. DOI: https://doi.org/10.1111/j.1540-5850.2009.00922.x
View in Google Scholar
Castro, G. Á., & Camarillo, D. B. R. (2014). Determinants of tax revenue in OECD countries over the period 2001–2011. Contaduría y Administración, 53(3). doi: 10.1016/S0186-1042(14)71265-3. DOI: https://doi.org/10.1016/S0186-1042(14)71265-3
View in Google Scholar
Clausing, K. A. (2007). Corporate tax revenues in OECD countries. International Tax and Public Finance, 14(2). doi: 10.1007/s10797-006-7983-2. DOI: https://doi.org/10.1007/s10797-006-7983-2
View in Google Scholar
Das-Gupta, A., & Gang, I. N. (2000). Decomposing revenue effects of tax evasion and tax structure changes. International Tax and Public Finance, 7(2). doi: 10.1023/A:1008704520816. DOI: https://doi.org/10.1023/A:1008704520816
View in Google Scholar
Heim, J. J. (2017). Determinants of government receipts. In J. J. Heim. An econometric model of the US economy. Cham: Palgrave Macmillan. doi: 10.1007/978-3-319-50681-4_14. DOI: https://doi.org/10.1007/978-3-319-50681-4_14
View in Google Scholar
Karagöz, K. (2013). Determinants of tax revenue: does sectorial composition matter? Journal of Finance, Accounting and Management, 4(2).
View in Google Scholar
Mahdavi, S. (2008). The level and composition of tax revenue in developing countries: evidence from unbalanced panel data. International Review of Economics & Finance, 17(4). doi: 10.1016/j.iref.2008.01.001. DOI: https://doi.org/10.1016/j.iref.2008.01.001
View in Google Scholar
Malkina, M. Yu. (2016). Evaluation of the factors of Russian regions’ convergence / divergence in the level of budget provision based on the decomposition of the Theil-Bernoulli index. Spatial Economics, 3. doi: 10.14530/se.2016.3.016-037. (In Russian). DOI: https://doi.org/10.14530/se.2016.3.016-037
View in Google Scholar
Malkina, M. Yu., & Balakin, R. V. (2016). A factor analysis of changes in tax revenues for certain taxes in the Russian federation in 2006–2014. Finance and Credit, 32(704).
View in Google Scholar
Martinez-Vazquez, J., & Timofeev, A. (2014). Intra-regional equalization and growth in Russia. Comparative Economic Studies, 53(3). doi: 10.1057/ces. 2014.7. DOI: https://doi.org/10.1057/ces.2014.7
View in Google Scholar
Mishustin, M. V. (2016). Factors of growth of tax revenues: a macroeconomic approach. Economic Policy, 11(5). DOI: https://doi.org/10.18288/1994-5124-2016-5-01
View in Google Scholar
Ohno, T., Hotei, M., Sato, E., & Umezaki, C. (2015). Decomposition of the variation of corporate tax revenues: based on consideration of corporate tax paradox. Public Policy Review, 11(2).
View in Google Scholar
Serkah, M., & Abizadeh, S. (2005). Economic growth and tax components: an analysis of tax changes in OECD. Applied Economics, 37(19). doi: 10.1080/ 00036840500293813. DOI: https://doi.org/10.1080/00036840500293813
View in Google Scholar
Sharma, P., & Singh, J. (2015). Determinants of tax-revenue in India: a principal component analysis approach. International Journal of Economics and Business Research, 10(1). doi: 10.1504/IJEBR.2015.070268. DOI: https://doi.org/10.1504/IJEBR.2015.070268
View in Google Scholar
Shorrocks, A. F. (1982). Inequality decomposition by Factor Components. Econometrica, 50(1). DOI: https://doi.org/10.2307/1912537
View in Google Scholar
Yushkov, A. (2015). Fiscal decentralization and regional economic growth: theory, empirics, and the Russian experience. Russian Journal of Economics, 1. doi: 10.1016/j.ruje.2016.02.004. DOI: https://doi.org/10.1016/j.ruje.2016.02.004
View in Google Scholar
Zhang, J. (2016). Does a tax-sharing system make sense? Understanding China’s growth miracle. In J. Zhang. End of hyper growth in China? New York: Palgrave Macmillan. doi: 10.1057/978-1-137-53718-8_2. DOI: https://doi.org/10.1057/978-1-137-53718-8_2
View in Google Scholar