Russia’s Tax Crisis: Explaining Falling Revenues in a Transitional Economy
Version of Record online: 7 FEB 2003
1999 Blackwell Publishers Ltd.
Economics & Politics
Volume 11, Issue 2, pages 145–169, July 1999
How to Cite
Reisman, D. (1999), Russia’s Tax Crisis: Explaining Falling Revenues in a Transitional Economy. Economics & Politics, 11: 145–169. doi: 10.1111/1468-0343.00056
- Issue online: 7 FEB 2003
- Version of Record online: 7 FEB 2003
- Cited By
Market reforms in Russia have been threatened in recent years by a continuing, dramatic decline in tax revenues. This article analyzes the fiscal data in search of an explanation. While part of the drop in collections can be attributed to rate changes and transitional macroeconomic dislocation, a sizable residual reflects a progressively worsening tax administration. This, in turn, is traced to perverse incentives in the system by which tax revenues are shared between central, regional, and local governments in Russia’s evolving federal system. As in other contexts, divided property rights reduce owners’ motivation to invest in a jointly-owned asset.