Importance The research focuses on personal income tax and analyzes whether it is possible to differentiate personal income tax between federal and regional budgets. Objectives The research pursues creating a reasonable mechanism to reallocate taxes among levels of the budgetary system of the Russian Federation. Methods Having analyzed scholarly literature, currently there is no mechanism to assess how taxes should be allocated, including personal income tax, among budgetary levels. Taxes are allocated on the basis of subjective estimates of policy makers in line with consumption requirements of areas. In this respect, we devised a specific mechanism to differentiating personal income tax revenue between regional and federal levels. We assessed theoretical criteria of tax allocation among budgetary levels and chose an integral indicator for homogeneity of time series (2010–2014) throughout 83 regions of the Russian Federations. Using the weight theory, we determined the percentage of personal income tax revenue remitted to regional and State budgets. Results We designed an algorithm to differentiate personal income tax between regional and federal levels of budget. The algorithm is illustrated with the Nizhny Novgorod Oblast. The significance of the mechanism was verified by mathematical analysis, confirming the reasonableness of the proposed algorithm. Conclusions and Relevance The results verify the hypothesis stating that personal income tax could be reallocated between federal and regional levels of the budget on the basis of the estimation mechanism that includes some division criteria. The findings can be used to form profitable parts of regional budgets.
Keywords: personal income tax, budget, variation coefficient, tax revenue, federalism
References:
Zimčík P. Economic Growth and Budget Constraints: EU Countries Panel Data Analysis. Review of Economic Perspectives, 2015, vol. 16, iss. 2, pp. 87–101.
Jackson P.M., Brown C. Public Sector Economics. Blackwell, 2004.
Ferrando M., Muñoz C.P., Salas G. Negative Income Tax in Uruguay: An Alternative Redistribution Policy? Desarrollo y Sociedad, 2012, no. 70, pp. 151–185.
Kalinina O. An Innovative Approach to the Formation of a Progressive Taxation Probabilistic Model on Personal Incomes. International Journal of Economics and Financial Issues, 2016, vol. 6, iss. 3, pp. 995–1002.
Yashina N., Ginzburg M., Chesnokova L. Fiscal Federalism and Redistributive Politics for Income Taxes: Case of Russia’s Regions. Proceedings of the 13th International Scientific Conference “European Financial System 2016”. Masaryk University, Faculty of Economics and Administration, Department of Finance and Institute for Financial Market, 2016, pp. 862–871.
Hassan F.M.A., Bogetić Ž. Effects of Personal Income Tax on Income Distribution: Example from Bulgaria. Contemporary Economic Policy, 1996, vol. 14, iss. 4, pp. 17–28. doi: 10.1111/j.1465-7287.1996.tb00630.x
Creedy J. Personal Income Tax Structure: Theory and Policy. In: Tax Reform in Open Economies: International and Country Perspectives. Edward Elgar Publishing, 2010, pp. 137–165.
Rasell E., Bernstein J., Tang K. The Impact of Health Care Financing on Family Budgets. International Journal of Health Services, 1994, vol. 24, iss. 4, pp. 691–714. doi: 10.2190/MM38-P4HV-2W32-4KYR
Bruce D., Fox W.F., Yang Z. Base Mobility and State Personal Income Taxes. National Tax Journal, 2010, vol. 63, iss. 4, pp. 946–966.
Pereira A.M., Pereira R.M. Environmental Fiscal Reform and Fiscal Consolidation: The Quest for the Third Dividend in Portugal. Public Finance Review, 2014, vol. 42, iss. 2, pp. 222–253. doi: 10.1177/1091142113485803
Jenderny K. Mobility of Top Incomes in Germany. TheReview of Income and Wealth, 2016, vol. 62, iss. 2, pp. 245–265. doi: 10.1111/roiw.12184
De Rooy J. Local Taxes and Personal Income: An Impact Analysis. Public Finance Review, 1982, vol. 10, iss. 4, pp. 457–478. doi: 10.1177/109114218201000403
Creedy J., Mellish A. Changes in the Tax Mix from Income Taxation to GST: Revenue and Redistribution. New Zealand Economic Papers, 2011, vol. 45, iss. 3, pp. 299–309. doi: Link
Montero P.A., Picón E.M.H. The Stabilization Effect of the Regional Budgets in Spain. An Estimation for the Period 2002–2008. Revista de Estudios Regionales, 2015, iss. 103, pp. 131–160.
Gómez M.C., Granados R.M., De Dios Jiménez Aguilera J. How Much does Dependency Cost in Andalusia? Revista de Estudios Regionales, 2014, iss. 101, pp. 101–134.
Yashina N.I., Poyushcheva E.V., Kuryleva O.I., Yashin K.S. Sovershenstvovanie teoreticheskikh i metodicheskikh osnov upravleniya raskhodami byudzheta [Improving theoretical and methodological principles of budgetary spending management]. Nizhny Novgorod, NGPU Publ., 2013.
Mitin D., Yashina N., Ginzburg M. Political Uncertainty as an Economic Risk Factor: Regional Perspective from Russia. Proceedings of the 12th International Scientific Conference “European Financial System 2015”. Masaryk University, Faculty of Economics and Administration, Department of Finance and Institute for Financial Market, 2015, pp. 359–368.
Kaplan R.S. The Balanced Scorecard: Measures That Drive Performance. Harvard Business Review, 1992, iss. 70-1, pp. 71–79.
Monaco. In: Background Notes. U.S. Department of State Publication, 1995, no. 9, pp. 1–4.
Peteri G., Horvath T.M. Regulation and Competition in Local Utilities Sector in Central and Eastern Europe. In: Navigation to the Market. Budapest, OSI/LGI, 2003, pp. 13–98.
Naseem A., Reesor M. Analysis of Tax-Deductible Interest Payments for Re-Advanceable Canadian Mortgages. In: Advances in Mathematical and Computational Methods: Addressing Modern Challenges of Science, Technology, and Society. Book 1368. American Institute of Physics, 2011, pp. 221–224.
