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Assessment of the impact of shadow economy on the amount of tax revenue: A regional perspective

Vol. 22, Iss. 11, NOVEMBER 2019

Received: 15 August 2016

Received in revised form: 26 August 2016

Accepted: 5 September 2016

Available online: 15 November 2019

Subject Heading: Tax and taxation

JEL Classification: H21, H26, H61, H62, H71

Pages: 1309–1324

https://doi.org/10.24891/ia.22.11.1309

Tsepelev O.A. Amur State University (AmSU), Blagoveshchensk, Amur Oblast, Russian Federation
tsepelev_o@mail.ru

ORCID id: not available

Kolesnikova O.S. Amur State University (AmSU), Blagoveshchensk, Amur Oblast, Russian Federation
kolesnikova.o.s@yandex.ru

ORCID id: not available

Subject The article examines the role of shadow economy as one of the factors influencing the yield and stability of the budget.
Objectives The paper aims to quantify the impact of the underground economy on the amount of tax revenues of regional budgets and justify the need for systematic identification of tax losses from the shadow economy for effective fiscal policy.
Methods For the study, we used the balancing method, based on comparison of data from different sources.
Results In the Amur Oblast, the level of shadow economy is quite high due to the existence of a large number of factors for emergence and spread of the phenomenon, particularly in trade, agriculture, transport and communications. Annually, the regional budget loses a significant portion of tax revenues. This reduces its autonomy, increases dependence on federal transfers and promotes the growth of public debt of the oblast.
Conclusions We conclude that the shadow economy has a significant impact on the amount of tax revenues and, consequently, it reduces the possibility of realization of socio-economic policy of the oblast. Therefore, the reduction of budget tax losses from the shadow economy is an essential prerequisite for sustainable development of the oblast.

Keywords: shadow economy, regional budget, tax losses, personal income tax, tax collection

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