Finance and Credit

Improving the Russian tax system on the basis of tax payments differentiation for innovation-led economic development: The personal income tax case

Vol. 24, Iss. 7, JULY 2018

Received: 13 June 2018

Received in revised form: 27 June 2018

Accepted: 11 July 2018

Available online: 27 July 2018

Subject Heading: FISCAL SYSTEM

JEL Classification: H21, H23, H61, H77

Pages: 15471559

Yashina N.I. National Research Lobachevsky State University of Nizhny Novgorod (UNN), Nizhny Novgorod, Russian Federation

ORCID id: not available

Ginzburg M.Yu. National Research Lobachevsky State University of Nizhny Novgorod (UNN), Nizhny Novgorod, Russian Federation

ORCID id: not available

Chesnokova L.A. National Research Lobachevsky State University of Nizhny Novgorod (UNN), Nizhny Novgorod, Russian Federation

ORCID id: not available

Importance The current system of tax revenue distribution in the Russian Federation rests on achieving certain level of revenues and targeted tax collection rates. Like in many countries of the world, the percentage of revenues to a certain budget does not reflect the actual economic capacity of the territory.
Objectives The study aims to improve our previously developed algorithm for differentiating the tax revenues among budgets of different levels.
Methods We employ factor analysis and time series analysis to define major differentiating criteria for tax revenues at different budget levels.
Results The developed algorithm enabled to link the expected result, taxable capacity of territories and socio-economic aspects of development. We distinguish four groups of possible personal income tax distribution among budget levels. The findings confirmed the relation of tax revenues and people's welfare in the territory, the size of revenues and social support needs, the dependence of tax split on taxable capacity of territories.
Conclusions Instead of splitting revenues from personal income tax between the regional and local level, we propose a three-level split. The offered model implies an increase in taxable capacity, the level of individual income, a release of funds for enhancing the competitiveness of regions in the development of innovation-driven economy. The model can be used in other countries with the federal administrative-territorial structure.

Keywords: tax redistribution, personal income tax, tax revenue, budget, fiscal federalism


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