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

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  • Ponomareva, Maria
  • Zhuravskaya, Ekaterina

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 a larger popular base, regions with better bargaining position vis-à-vis the centre, and regions with governors in political opposition to the centre. We find that patterns of federal arrears are inconsistent with the redistributive politics premise that redistribution favours jurisdictions with ‘closer races’ for the incumbent in national elections. Variation in authorized tax deferrals, in part, can be explained by federal redistributive politics.

Suggested Citation

  • Ponomareva, Maria & Zhuravskaya, Ekaterina, 2004. "Federal Tax Arrears in Russia: Liquidity Problems, Federal Redistribution or Russian Resistance?," CEPR Discussion Papers 4267, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4267
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. repec:bla:jecsur:v:31:y:2017:i:4:p:1095-1129 is not listed on IDEAS
    4. 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.
    5. 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.

    More about this item

    Keywords

    redistributive politics; regional protection; Russia; tax arrears; transition;

    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
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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