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

Author

Listed:
  • 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.

Suggested Citation

  • Maria Ponomareva & Ekaterina Zhuravskaya, 2004. "Federal Tax Arrears in Russia: Liquidity Problems, Federal Redistribution, or Regional Resistance?," Working Papers w0003, Center for Economic and Financial Research (CEFIR).
  • Handle: RePEc:cfr:cefirw:w0003
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    Cited by:

    1. Lambert-Mogiliansky, Ariane & Sonin, Konstantin & Zhuravskaya, Ekaterina, 2007. "Are Russian commercial courts biased? Evidence from a bankruptcy law transplant," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 254-277, June.
    2. Koen Schoors & Konstantin Sonin, 2005. "Passive Creditors," International Finance, Wiley Blackwell, vol. 8(1), pages 57-86, July.
    3. Jeni Klugman & John Micklewright & Gerry Redmond, 2002. "Poverty in the Transition: Social expenditures and the working-age poor," Papers inwopa02/18, Innocenti Working Papers.
    4. Lambert-Mogiliansky, Ariane & Sonin, Konstantin & Zhuravskaya, Ekaterina, 2006. "Are Russian Commercial Courts Biased? Evidence from a Natural Bankruptcy Experiment," CEPR Discussion Papers 5998, C.E.P.R. Discussion Papers.
    5. repec:spr:anresc:v:61:y:2018:i:1:d:10.1007_s00168-017-0855-0 is not listed on IDEAS
    6. Libman, Alexander, 2008. "Federalism and regionalism in transition countries: A survey," MPRA Paper 29196, University Library of Munich, Germany.
    7. Alexander Libman & Lars P. Feld, 2013. "Strategic Tax Collection and Fiscal Decentralization: The Case of Russia," German Economic Review, Verein für Socialpolitik, vol. 14(4), pages 449-482, November.
    8. Elena Jarocinska, 2010. "Intergovernmental grants in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(2), pages 405-427, April.
    9. 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 dp-152, Boston University - Department of Economics.
    10. repec:bla:jecsur:v:31:y:2017:i:4:p:1095-1129 is not listed on IDEAS
    11. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    12. Alejandro Esteller-Moré, 2011. "Is the tax administration just a money machine? Empirical evidence on redistributive politics," Economics of Governance, Springer, vol. 12(3), pages 275-299, September.
    13. Mokhtari, Manouchehr & Grafova, Irina, 2007. "Corruption: Theory and evidence from the Russian Federation," Economic Systems, Elsevier, vol. 31(4), pages 412-422, December.
    14. Lambert-Mogiliansky, Ariane & Sonin, Konstantin & Zhuravskaya, Ekaterina, 2006. "Are Russian Commercial Courts Biased? Evidence from a Natural Bankruptcy Experiment," CEPR Discussion Papers 5998, C.E.P.R. Discussion Papers.
    15. Zakolyukina Anastasia, 2006. "Bankrtuptcy in Russia: External Management Performance," EERC Working Paper Series 06-09e, EERC Research Network, Russia and CIS.
    16. Alexander Libman, 2015. "Words or deeds: what matters? On the role of symbolic action in political decentralization," Empirical Economics, Springer, vol. 49(3), pages 801-838, November.
    17. 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.

    More about this item

    Keywords

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

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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