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Identifying the Relationship between the Dynamics of Tax Revenues and Investment Growth

Author

Listed:
  • Rodion V. Balakin

    (Financial Research Institute, Moscow, Russian Federation; Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russian Federation)

  • Yuliya A. Steshenko

    (Financial Research Institute, Moscow, Russian Federation)

Abstract

The purpose of the article is to assess the degree of relationship tax revenues growth on the increase in investment activity and value added in the context of types of taxes, regions of the Russian Federation and types of economic activity (sectors of the economy). As an indicator of investment activity is used the volume of investments in fixed assets according to the Central Bank of the Russian Federation. The correlation of this indicator with the indicators of the tax system and its individual elements is considered both for the entire economy and for various sectors, as well as at the level of specific regions. For comparison, the correlation with the GDP indicator is also additionally presented. In addition to the indicators of tax revenues, the indicators of the tax base are considered, since it is the tax base that is crucial for steps to minimize tax security risks. Additionally, the methodological features of the study are the deflation of indicators and the displacement of arrays when calculating correlations in order to identify the most stable correlation. The hypothesis of the study is that the tax policy as a whole does not limit the growth of investments in the country. The question of whether tax increases or decreases stimulate economic growth and investment activity to a greater extent remains controversial. The examples show that an increase in the taxes for taxpayers is not an impediment to economic development, and an increase in tax revenues is one of the sources of investment growth, since government investments and budget subsidies financed by tax increases are effective tools for improving the efficiency of using limited resources. As a result of the analysis, in most cases, the dynamics of tax revenues and investment volumes do not have a significant statistical relationship, which means that the current tax policy does not limit investment growth in the country, and there is no negative impact of the growth of budget tax revenues on investment growth.

Suggested Citation

  • Rodion V. Balakin & Yuliya A. Steshenko, 2026. "Identifying the Relationship between the Dynamics of Tax Revenues and Investment Growth," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 29-45, April.
    • Handle: RePEc:fru:finjrn:260202:p:29-45
    DOI: 10.31107/2075-1990-2026-2-29-45
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    References listed on IDEAS

    as
    1. Cornevin, Antoine & Corrales, Juan Sebastian & Mojica, Juan Pablo Angel, 2024. "Do tax revenues track economic growth? Comparing panel data estimators," Economic Modelling, Elsevier, vol. 140(C).
    2. Thompson Aneyire Kubaje & Richard Amoasi-Andoh & Ivy Eklemet & Sampson N. Wassan, 2025. "Foreign direct investments, tax revenue, and economic growth in Sub-Saharan Africa: does maximum tax apply?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 13(1), pages 2446651-244, December.
    3. Desislava G. Stoilova, 2023. "The Impact of Tax Structure on Economic Growth: New Empirical Evidence from Central and Eastern Europe," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 9(2), pages 181-196.
    4. Andrey V. Belov, 2018. "Tax Revenues, public investments and economic growth rates: evidence from Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 4(1), pages 45-56.
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    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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