IDEAS home Printed from https://ideas.repec.org/a/aiy/jnljtr/v7y2021i3p212-230.html
   My bibliography  Save this article

Progressive income tax as a driver for the development of high-tech industries in Russia

Author

Listed:
  • Evgeny Balatsky
  • Nataly Ekimova

Abstract

The study tests the hypothesis that Russia’s transition from flat to progressive income taxation will produce revenue that would be sufficient for the advancement of high-tech industries. To test this hypothesis, we considered two scenarios of the reform – the two-tiered system, which has been implemented since 2021, and the project of a four-tiered system proposed by the Liberal Democratic Party. To estimate the effects of the tax reform, we calculated the revenues from taxing high-income taxpayer groups and subgroups at specific tax rates. As a result, it was found that the reform could produce 187 billion Rubles in extra revenue, which means that there is a vast discrepancy between the calculated estimates and the government’s expectations (60 billion Rubles). In other words, the Russian government significantly underestimates the potential of the income tax. According to the second scenario, which aims to build a more sophisticated income tax system, the revenue would be 1.1 trillion Rubles. Thus, a well-designed scale of the personal income tax will enable the government to considerably enhance this tool’s fiscal efficiency. The calculations of the extra revenue generated by the reform relied on the statistics of the World Inequality Database (WID) for 2019. To test the relevance of the input and output data, we conducted a comparative analysis at the micro-level by looking at the wage levels in Russian, American and European space corporations. We found that the micro-economic data are closer to the WID statistics rather than to Rosstat, which confirmed the accuracy of our results. Our calculations have confirmed the general hypothesis and showed that the extra revenue from the reform will enable the government to fully modernize microelectronics and the geothermal industry in Russia.

Suggested Citation

  • Evgeny Balatsky & Nataly Ekimova, 2021. "Progressive income tax as a driver for the development of high-tech industries in Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 7(3), pages 212-230.
    • Handle: RePEc:aiy:jnljtr:v:7:y:2021:i:3:p:212-230
    DOI: https://doi.org/10.15826/jtr.2021.7.3.099
    as

    Download full text from publisher

    File URL: https://jtr.urfu.ru/fileadmin/user_upload/site_15907/2021/Balatsky_Ekimova.pdf
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.15826/jtr.2021.7.3.099?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. S. Sinel'nikov-Murylev & S. Batkibekov & P. Kadochnikov & D. Nekipelov., 2003. "Assesment of the Results of Personal Income Tax Reform in Russia," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    2. Robert P. Hagemann & Brian R. Jones & Robert Bruce Montador, 1987. "Tax Reform in OECD Countries: Economic Rationale and Consequences," OECD Economics Department Working Papers 40, OECD Publishing.
    3. Marek Dabrowski & Magdalena Tomczynska, 2001. "Tax Reforms in Transition Economies – a Mixed Record and Complex Future Agenda," CASE Network Studies and Analyses 0231, CASE-Center for Social and Economic Research.
    4. Benjamin N. Livchits & Svetlana V. Livchits, 2018. "Poverty and Inequality in Income of the Population in Russia and Abroad. Part 2," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Evgeny V. Balatsky & Nataly A. Ekimova, 2023. "Monetary policy on launching new production facilities in Russia: Opportunities in the semiconductor market," Upravlenets, Ural State University of Economics, vol. 14(5), pages 16-28, November.

    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. repec:ces:ifodic:v:2:y:2004:i:3:p:14567754 is not listed on IDEAS
    2. Beáta Blechová, 2012. "Progresivní nebo "rovná" daň - ekonomické i politické dilema [Progressive or "Flat" Tax - Economic and Political Dilemma]," Politická ekonomie, Prague University of Economics and Business, vol. 2012(5), pages 649-667.
    3. Margit Schratzenstaller, 2004. "Towards Dual Income Taxes - a Country Comparative Perspective," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(3), pages 23-30, October.
    4. Margit Schratzenstaller, 2003. "Dualisierung von Einkommensteuersystemen: Stand und Perspektiven im internationalen Vergleich," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(4), pages 535-550.
    5. Sergey Sinelnikov & Pavel Kadochnikov & Ilya Trunin (ed.), 2006. "Fiscal Federalism in Russia: Soft Budget Constraints of Regional Governments," Books, Gaidar Institute for Economic Policy, edition 1, number 4.
    6. Susan St. John, 2007. "Farewell to Tax Neutrality: The Implications for an Aging Population," The Economic and Labour Relations Review, , vol. 18(1), pages 27-52, November.
    7. Margit Schratzenstaller, 2004. "Towards Dual Income Taxes - a Country Comparative Perspective," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(03), pages 23-30, October.
    8. Heitger, Bernhard, 1989. "Wachstumswirkungen von Steuern und Staatsausgaben," Kiel Discussion Papers 148, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    progressive taxation; personal income tax; PIT; effectiveness; industry analysis;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    Statistics

    Access and download statistics

    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:7:y:2021:i:3:p:212-230. 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.