IDEAS home Printed from https://ideas.repec.org/a/aiy/jnljtr/v5y2019i1p6-22.html
   My bibliography  Save this article

Evaluating scenarios of a personal income tax reform in Russia

Author

Listed:
  • Evgeny V. Balatsky
  • Natalia A. Ekimova

Abstract

This article is aimed at evaluating different scenarios of the personal income tax reform in Russia, intended to replace the flat tax scale with a progressive scale. To test the expediency of this plan, the authors present a three-parameter model to calculate the expected effects from different scenarios. The model is based on the idea that the best project should simultaneously reduce the assets ratio, increase budgetary revenue and should minimize the risk of the reform’s non-fulfillment. The research relies on the statistical data on the population’s income distribution. To neutralize distortions, the authors calibrated the initial statistical data on distribution in the high-income group (tenth decile) of the population. The risk of non-fulfillment was assessed through an expert poll. The proposed model was used to test four reform projects, which were developed by the government, the Communist Party, the Liberal Democratic Party, and the party “Just Russia”. It was found that the best project, according to the three parameters applied in the analysis, was the governmental project, which preserves the flat income scale and raises the rate from 13 to 15%. It was also shown that the other projects dramatically overestimated the growth in tax revenues due to incorrect calculations of the distribution of the population’s incomes in the tenth decile group. Thus, at the moment there are no rational alternatives to the governmental project of the reform and there is also no consensus between the Russian opposition parties and the expert community, which prevents them from working together to design a single reform project. It is concluded that at present Russia needs a balanced project which would include multi-step adjustments of the personal income tax over an extended period of time – ten years or more.

Suggested Citation

  • Evgeny V. Balatsky & Natalia A. Ekimova, 2019. "Evaluating scenarios of a personal income tax reform in Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 5(1), pages 6-22.
    • Handle: RePEc:aiy:jnljtr:v:5:y:2019:i:1:p:6-22
    DOI: http://dx.doi.org/10.15826/jtr.2019.5.1.057
    as

    Download full text from publisher

    File URL: https://jtr.urfu.ru/fileadmin/user_upload/site_15907/main/Balatsky_Ekimova.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.15826/jtr.2019.5.1.057?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bernardi, LUIGI, 2013. "Recent findings regarding the shift from direct to indirect taxation in the EA-17," MPRA Paper 47877, University Library of Munich, Germany.
    2. Stoyan Tanchev, 2016. "The Role of The Proportional Income Tax on Economic Growth of Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 66-77.
    3. Jens Matthias Arnold, 2008. "Do Tax Structures Affect Aggregate Economic Growth?: Empirical Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 643, OECD Publishing.
    4. Gareth D. Myles, 2009. "Economic Growth and the Role of Taxation-Theory," OECD Economics Department Working Papers 713, OECD Publishing.
    5. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    6. Gareth D. Myles, 2009. "Economic Growth and the Role of Taxation - Disaggregate Data," OECD Economics Department Working Papers 715, OECD Publishing.
    7. Mishustin, Michael V. (Мишустин, Михаил), 2016. "Factors of Growth of Tax Revenues: A Macroeconomic Approach [Факторы Роста Налоговых Доходов: Макроэкономический Подход]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 8-27, October.
    8. Gareth D. Myles, 2009. "Economic Growth and the Role of Taxation - Aggregate Data," OECD Economics Department Working Papers 714, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Evgeny V. Balatsky & Natalya A. Ekimova, 2019. "The Impact of Tax Reforms on the Behaviour of Economic Agents (Indirect Taxation in Russia and the USA)," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 5(2), pages 129-147.
    2. Emilian DOBRESCU, 2016. "Controversies over the Size of the Public Budget," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 5-34, December.
    3. Humberto Banda-Ortiz & Edgar Demetrio Tovar-García, 2018. "Impacto de la estructura tributaria sobre el crecimiento económico: el caso de México," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 13(4), pages 585-601, Octubre-D.
    4. Doris Prammer, 2011. "Quality of taxation and the crisis: Tax shifts from a growth perspective," Taxation Papers 29, Directorate General Taxation and Customs Union, European Commission.
    5. Desislava Stoilova & Ivan Todorov, 2021. "Fiscal policy and economic growth: Evidence from Central and Eastern Europe," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 7(2), pages 146-159.
    6. Åsa Johansson, 2016. "Public Finance, Economic Growth and Inequality: A Survey of the Evidence," OECD Economics Department Working Papers 1346, OECD Publishing.
    7. LEONIDA, Ionel, 2021. "An Attempt To Design A Fiscal Profile Of The Romanian Tax System," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 25(4), pages 88-98, December.
    8. Jean-Marc Fournier & Åsa Johansson, 2016. "The Effect of the Size and the Mix of Public Spending on Growth and Inequality," OECD Economics Department Working Papers 1344, OECD Publishing.
    9. Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2013. "Joint determinants of fiscal policy, income inequality and economic growth," Economic Modelling, Elsevier, vol. 30(C), pages 814-824.
    10. Luigi, Bernardi, 2011. "Economic crisis and taxation in Europe," MPRA Paper 31007, University Library of Munich, Germany.
    11. Strohner, Ludwig & Thomas, Tobias, 2019. "Mehr Wachstum, Wohlstand und Beschäftigung: Ökonomische Effekte der Steuerreform 2020-23," Policy Notes 32, EcoAustria – Institute for Economic Research.
    12. Brendan O'Connor, 2013. "The Structure of Ireland’s Tax System and Options for Growth Enhancing Reform," The Economic and Social Review, Economic and Social Studies, vol. 44(4), pages 511-540.
    13. Aldieri, Luigi & Makkonen, Teemu & Paolo Vinci, Concetto, 2020. "Environmental knowledge spillovers and productivity: A patent analysis for large international firms in the energy, water and land resources fields," Resources Policy, Elsevier, vol. 69(C).
    14. Dackehag, Margareta & Hansson, Åsa, 2015. "Taxation of Dividend Income and Economic Growth: The Case of Europe," Working Paper Series 1081, Research Institute of Industrial Economics.
    15. åsa Johansson & Christopher Heady & Jens Arnold & Bert Brys & Laura Vartia & Philip Spier, 2010. "Taxes and Firm Performance: Evidence from the OECD," Chapters, in: Iris Claus & Norman Gemmell & Michelle Harding & David White (ed.), Tax Reform in Open Economies, chapter 2, Edward Elgar Publishing.
    16. Zhang, Lifeng & Ru, Yucong & Li, Jingkui, 2016. "Optimal tax structure and public expenditure composition in a simple model of endogenous growth," Economic Modelling, Elsevier, vol. 59(C), pages 352-360.
    17. Thomas, Tobias & Berger, Johannes & Graf, Nikolaus & Strohner, Ludwig, 2017. "Volkswirtschaftliche Effekte unterschiedlicher Abgabensenkungen in Österreich," Policy Notes 19, EcoAustria – Institute for Economic Research.
    18. Desislava G. Stoilova, 2023. "The Impact of Tax Structure on Economic Growth: New Empirical Evidence from Central and Eastern Europe," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 9(2), pages 181-196.
    19. Teuta Balliu & Loreta Bebi, 2015. "Taxation and Government Expenditures in the Center of the Albanian Policy Debate," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 1, ejes_v1_i.
    20. Angela Köppl & Margit Schratzenstaller-Altzinger, 2015. "The Austrian Tax System – Perspectives for Reform," WIFO Bulletin, WIFO, vol. 20(6), pages 72-79, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aiy:jnljtr:v:5:y:2019:i:1:p:6-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalia Starodubets (email available below). General contact details of provider: https://edirc.repec.org/data/seurfru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.