Regional Tax Policy Diversification and Budget Sustainability: A Scenario Typology and Fiscal Assessment for Three Russian Regions
Abstract
Regional Tax Policy Diversification and Budget Sustainability: A Scenario Typology and Fiscal Assessment for Three Russian Regions
Abstract
This article develops a typology of regional tax policy diversification scenarios and assesses their implications for budget sustainability. It draws on Federal Tax Service data and Accounts Chamber reports for 2020–2024 covering three Russian regions: Khanty-Mansi Autonomous Okrug–Yugra, Samara Region, and the Republic of Kalmykia. The analysis identified substantial persistence in tax revenues, with an autocorrelation coefficient of 0.74, and detected structural shifts in 2022 and 2023. The correlation between corporate profit tax revenues and oil prices was 0.89 in the resource-based region and 0.11 in the subsidized region.
K-means clustering and decision-tree analysis identified three scenario types. The evolutionary scenario diversifies the tax mix through property- and consumption-oriented models. The modernization scenario includes models based on formalizing economic activity, encouraging investment, and digitalizing tax administration. The force-majeure scenario redistributes revenues through centralization with transfers back to regions or through the decentralization of excise revenue. Key risks include disputes over cadastral valuations, fiscal traps, a shift in the tax burden to final consumers, taxpayer relocation to foreign jurisdictions, and misuse of intergovernmental transfers.
The fiscal assessment estimated that the modernization model based on formalization could generate an additional RUB 81.6 billion annually if extrapolated to all subsidized regions. The estimated local effect of the evolutionary model was equivalent to 2–3% of a region’s own-source revenues. Under the force-majeure scenario, regions could have more resources at their disposal while losing tax autonomy. The article recommends selecting scenarios according to each region’s revenue structure and exposure to fiscal risks.
Keywords — Regional tax policy, tax diversification, budget sustainability, fiscal autonomy, scenario analysis, Russia.