Tax Capacity of the Russian Federation Constituent Entities: Problems of Assessment and Unequal Distribution

The Russian Federation (RF) is among the countries with a high degree of fiscal centralization. Centralization is connected with the tax assignment system by government levels. The Tax Code of the Russian Federation defines a closed list of federal, regional and local taxes. Meanwhile, federal taxes constitute the core of the country’s tax system, while regional and local taxes account for a small share in total tax revenues. Therefore, regional and local taxes cannot be the basis for the RF constituent entities’ budgets and local budgets. The RF constituent entities’ tax capacity determines the opportunities for their economic development. However, due to uneven economic development, there is a significant differentiation in the level of RF constituent entities’ fiscal capacity, which is associated with their insufficient tax capacity. The purpose of the study is to analyze tax revenues by federal districts and the RF constituent entities in order to identify the factors that affect them, the degree of these revenues differentiation, the system of tax revenues distribution by government level as a basis for assessing the tax capacity in budget planning.