The Potential for Increasing Tax Revenues Amidst Reducing Fiscal Inconsistencies Zone(based on Kazakhstan’s economy researches)

Relevance. In 2009, tax reform was carried out in Kazakhstan and basic tax rates were reduced. Over the past period, the level of state budget expenditures declined to 19% of GDP. The need to ensure the inclusive economic growth requires an increase in the tax burden and improvement in the redistributive function of the budget. The purpose of this study is to quantify the limits of increasing fiscal burden, which will not hinder economic growth and fiscal function of budget, by taking into account the reduction in the width of the fiscal inconsistencies’ zone from 2010 to 2018. Hypothesis. It is expected that the calculations carried out in the paper, using the approaches of the theoretical model of the Laffer curve and fiscal analysis, will provide a real corridor within which it will be possible to increase the tax burden in the economy of Kazakhstan. The methodological basis of the study aims to establish the relationship between tax burden, economic growth and budget tax revenues, which are used in the theoretical model of «Tax Laffer curve». In order to construct the production and fiscal points of the Laffer curve for the Kazakhstani economy, we applied the methods of fiscal analysis using production and institutional functions of Balatsky E.V. We used the data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan. As a result of the study, the authors estimated the maximum points of the production function curve and the fiscal function curve . The comparison with the actual value of the tax burden allowed quantifying the potential increase of tax rate in Kazakhstan. But the re­vealed trend of reducing fiscal inconsistencies zone’s width for 2010–2018 required an adju­stment of the results, taking into account the low degree of freedom for the possible manipulation of tax rates. Therefore we carried out additional calculations with the prolongation of the natural limit of the fiscal burden, i.e. 1st kind of the Laffer points. The results show that the stage-wise increase in tax-to-GDP ratio amounting to 4–5% within 10 years from the level of 2018 is possible without any negative effect on economic growth and tax collection. The results of the study can be used to implement tax policy in Kazakhstan.