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

Ekaterina Zhuravskaya and Maria Ponomareva

No 4267, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Redistributive politics; Transition; Russia; Tax arrears; regional protection (search for similar items in EconPapers)
JEL-codes: H11 H26 P26 R50 (search for similar items in EconPapers)
Date: 2004-02
New Economics Papers: this item is included in nep-cis, nep-geo and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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