Content №3 от 2023
Stress Changes of Russian Regions’ Tax Systems under the Influence of External Shocks
The study aims to examine the influence of external shocks, such as sanctions, the pandemic, and oil price fluctuations, on tax revenue stress in the country’s federal discticts and individual consistuent entities. To achieve this, we have developed a tax revenue stress index, which represents the spread from the moving standard deviation to the sliding rate of growth of annual tax revenues, and a methodology to decompose the index by its sources
Using the developed index, we estimate tax revenue stress in Russian regions from January 2013 to October 2022, considering the pre-pandemic, pandemic, and recovery periods. Our findings indicate a significant positive correlation between tax revenue stress and oil price stress with a lag of 4-7 months, although the response of regions to oil market conditions varies. Notably, the Far Eastern, Ural, and Siberian federal districts experience higher average tax revenue stress. Among the federal districts, the Ural district plays a major role in both increasing and reducing tax revenue stress, while the Central district acts as a strong stress buffer during external shocks.
The pandemic had a significant impact on tax revenues in most regions. However, in 24 out of 85 examined constitent entities of the Russian Federation, the average stress decreased, and in 36 regions, the maximum stress value decreased. During recovery, tax revenue stress was lower in 70 entities compared to the previous two periods. Nevertheless, metropolitan cities and certain regions have already felt the effects of new sanctions imposed in 2022. Notably, stress patterns behave abnormally in the Far Eastern border regions and Murmansk Oblast , which can be attributed to specific resilience factors related to their regional economies and specialization.
