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Strategic Tax Collection and Fiscal Decentralisation: The Case of Russia

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  • Alexander Libman
  • Lars P. Feld

Abstract

In a centralized federation, where tax rates and taxation rules are set by the federal govern-ment, manipulating the thoroughness of tax auditing and the effectiveness of tax collection could be attractive for regional authorities because of a variety of reasons. These range from tax competition to principal-agent problems, state capture and benefits of fiscal equalisation. In this paper we discuss strategic tax auditing and collection from the perspective of fiscal federalism and test for strategic tax collection empirically using data of the Russian Federa-tion. Russia?s regional authorities in the 1990s have always been suspect of tax auditing ma-nipulations in their favour. However, in the 2000s increasing bargaining power of the centre seems to induce tax collection bodies in the regions to manipulate tax auditing in favour of the federation. We find partial evidence in favour of both of these hypotheses.

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  • Alexander Libman & Lars P. Feld, 2007. "Strategic Tax Collection and Fiscal Decentralisation: The Case of Russia," CREMA Working Paper Series 2007-09, Center for Research in Economics, Management and the Arts (CREMA).
    • Handle: RePEc:cra:wpaper:2007-09
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    Cited by:

    1. Bönke, Timm & Jochimsen, Beate & Schröder, Carsten, 2014. "Fiscal federalism and tax enforcement," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100394, Verein für Socialpolitik / German Economic Association.
    2. Alexeev, Michael & Chernyavskiy, Andrey, 2018. "A tale of two crises: Federal transfers and regional economies in Russia in 2009 and 2014–2015," Economic Systems, Elsevier, vol. 42(2), pages 175-185.
    3. Bönke, Timm & Jochimsen, Beate & Schröder, Carsten, 2011. "Fiscal equalization and regions' (un)willingness-to-tax: Evidence from Germany," Economics Working Papers 2011-06, Christian-Albrechts-University of Kiel, Department of Economics.
    4. Libman, Alexander, 2008. "Endogenous (De)Centralization and the Russian Federalism," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 9(1), pages 23-57.
    5. Libman, A., 2010. "Empirical Research on Determinants of Decentralization: A Literature Survey," Journal of the New Economic Association, New Economic Association, issue 6, pages 10-29.
    6. Alexander Libman, 2012. "Sub-national political regimes and asymmetric fiscal decentralization," Constitutional Political Economy, Springer, vol. 23(4), pages 302-336, December.
    7. Timm Bönke & Beate Jochimsen & Carsten Schröder, 2017. "Fiscal Equalization and Tax Enforcement," German Economic Review, Verein für Socialpolitik, vol. 18(3), pages 377-409, August.
    8. Libman, Alexander, 2008. "Federalism and regionalism in transition countries: A survey," MPRA Paper 29196, University Library of Munich, Germany.
    9. Libman, Alexander, 2009. "Constitutions, Regulations, and Taxes: Contradictions of Different Aspects of Decentralization," MPRA Paper 15854, University Library of Munich, Germany.
    10. Alexeev, Michael (Алексеев, Майкл) & Mamedov, Arseny (Мамедов, Арсений) & Fomina, Evgenia (Фомина, Евгения) & Deryugin, Alexander (Дерюгин, Александр), 2017. "Influence of the Main Characteristics of Interbudgetary Relations on the Indicators of Economic Development of the Subjects of the Russian Federation [Влияние Основных Характеристик Межбюджетных От," Working Papers 031717, Russian Presidential Academy of National Economy and Public Administration.
    11. repec:dau:papers:123456789/6913 is not listed on IDEAS
    12. Timm Bönke & Beate Jochimsen & Carsten Schröder, 2013. "Fiscal Federalism and Tax Administration: Evidence from Germany," Discussion Papers of DIW Berlin 1307, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    fiscal federalism; tax arrears; transition economies;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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