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Federal Tax Arrears in Russia: Liquidity Problems, Federal Redistribution, or Regional Resistance?

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  • Maria Ponomareva

    (Northwestern University)

  • Ekaterina Zhuravskaya

    ()
    (Institute for Advanced Study, Princeton, Center for Economic and Financial Research, Moscow, and CEPR)

Abstract

Three hypotheses about the nature of federal tax arrears in Russia in the second half of the 1990s are tested empirically. Tax arrears can be a result of: 1) liquidity problems in firms, 2) redistribute subsidies of the federal government, or 3) regional political resistance to federal tax collectors. Liquidity problems in firms explain a large part of variation in tax arrears. Regional political resistance to federal tax collectors was also an important factor: For a given level of liquidity, federal arrears accumulated faster in regions where governors had larger popular base, regions with better bargaining position vis-a-vis the center, and regions with governors in political opposition to the center. We find that patterns of federal arrears are inconsistent with redistributive politics premise that redistribution favors jurisdictions with “closer races” for the incumbent on the national elections. Variation in authorized tax deferrals, in part, can be explained by federal redistributive politics.

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Bibliographic Info

Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0003.

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Length: 35 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:cfr:cefirw:w0003

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Keywords: Tax arrears; Regional protection; Russia; Transition; Redistributive politics;

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Cited by:
  1. Mokhtari, Manouchehr & Grafova, Irina, 2007. "Corruption: Theory and evidence from the Russian Federation," Economic Systems, Elsevier, Elsevier, vol. 31(4), pages 412-422, December.
  2. Klugman, Jeni & Micklewright, John & Redmond, Gerry, 2002. "Poverty in the Transition: Social Expenditures and the Working-Age Poor," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3389, C.E.P.R. Discussion Papers.
  3. Zakolyukina Anastasia, 2006. "Bankrtuptcy in Russia: External Management Performance," EERC Working Paper Series 06-09e, EERC Research Network, Russia and CIS.
  4. Koen Schoors & Konstantin Sonin, 2005. "Passive Creditors," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp737, William Davidson Institute at the University of Michigan.
  5. Ariane Lambert-Mogiliansky & Konstantin Sonin & Ekaterina Zhuravskaya, 2006. "Are Russian commercial courts biased?Evidence from a natural bankruptcy experiment," PSE Working Papers, HAL halshs-00590402, HAL.
  6. Pranab Bardhan & Dilip Mookherjee, 2005. "Decentralization, Corruption and Government Accountability: An Overview," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series, Boston University - Department of Economics dp-152, Boston University - Department of Economics.
  7. Libman, Alexander, 2008. "Federalism and regionalism in transition countries: A survey," MPRA Paper 29196, University Library of Munich, Germany.
  8. Ariane Lambert-Mogiliansky & Konstantin Sonin & Ekaterina Zhuravskaya, 2007. "Are Russian Commercial Courts Biased? Evidence from a Bankruptcy Law Transplant," Working Papers, Center for Economic and Financial Research (CEFIR) w0099, Center for Economic and Financial Research (CEFIR).
  9. Shumilov, Andrei, 2008. "Performance of business groups: Evidence from post-crisis Russia," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 24/2008, Bank of Finland, Institute for Economies in Transition.
  10. Alexander Libman & Lars P. Feld, 2013. "Strategic Tax Collection and Fiscal Decentralization: The Case of Russia," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 14(4), pages 449-482, November.
  11. Hochman, Gal & Tabakis, Chrysostomos & Zilberman, David, 2013. "The impact of international trade on institutions and infrastructure," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 126-140.
  12. repec:hal:wpaper:halshs-00590402 is not listed on IDEAS
  13. Alejandro Esteller-Moré, 2011. "Is the tax administration just a money machine? Empirical evidence on redistributive politics," Economics of Governance, Springer, Springer, vol. 12(3), pages 275-299, September.

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