The tax burden in Russia is not Excessively high
Recently Igor Shuvalov, the First Deputy Prime Minister of Russia noted that taxes in Russia in the next 6 years will not grow, and any new solution in regard to tax burden will be aimed at reduction thereof.
Herewith, the tax burden in Russia is not excessively high and rather comparable with the average level in OECD countries over 2000–2011 (Table 1). Table 1 Tax burden in OECD countries over 2000–2011(in % of GDP)
Recently Igor Shuvalov, the First Deputy Prime Minister of Russia noted that taxes in Russia in the next 6 years will not grow, and any new solution in regard to tax burden will be aimed at reduction thereof.
Herewith, the tax burden in Russia is not excessively high and rather comparable with the average level in OECD countries over 2000-2011 (Table 1).
According to the Russian Treasury [1], there were no drastic changes in the level of tax burden in the Russian economy, as well as in OECD countries during 2000-2011 (except for 2009-2010); it was maintained in the range of 35-36% of GDP. Thus, the level of tax burden in Russia is not too high and is rather comparable with the average level of OECD countries over 2000-2011.
One should also take into account the fact that the amount of the RF budget revenue is largely dependent on exports of primary commodities. Therefore, the tax burden in the RF economy includes a component based on the dynamics of energy products' prices (market component of the tax burden).
According to our estimates, the level of the tax burden in Russia (regardless market component, based on favorable dynamics of global energy market prices) is much lower than that in OECD countries. As shown in Fig. 1, the share of tax revenues of the Russian economy in 2010 amounted to 32.2% of GDP. Herewith, revenues derived from the long-term average oil price (structural) component made 27.2% of the GDP, those from income based on favorable situation in the global energy market component made 3.5% of the GDP, and from the component formed by contribution of other factors (including business cycles, government policy, investor and the public expectations, etc.) made 1.6% of GDP.
Fig. 1. Structural and Market Components of the RF Extended Government Budget Tax Revenue over 2002-2011 (as % of ВВП)
Source: Gaidar Institute estimates based on the Russian Treasury data.
In addition, basing on the structural and market components of the tax revenue of the Russian budget system [2], in Russia corporate income tax is the most sensitive one in terms of external economic situation.
In other words, the tax burden in Russia without regard to its structural component is much lower than in OECD countries. Therefore, the above data illustrates the assumption that in recent years the level of tax burden in the Russian economy is largely dependent on the market component of taxation (primarily corporate income tax), based on high global oil prices.
M.V. Kazakova, Ph.D. in Economics, Head of Economic Development Department
[1www.roskazna.ru.
[2] For details, see: S.G. Sinelnikov-Murylev, P.A. Kadochnikov, M.V. Kazakova, Analysis of the Structural and Market Components of Tax Burden in the Russian economy // IET Research Works No. 129P, 2009, p.189 (also available at the website http://www.iep.ru).
Recently Igor Shuvalov, the First Deputy Prime Minister of Russia noted that taxes in Russia in the next 6 years will not grow, and any new solution in regard to tax burden will be aimed at reduction thereof.
Herewith, the tax burden in Russia is not excessively high and rather comparable with the average level in OECD countries over 2000-2011 (Table 1).
According to the Russian Treasury [1], there were no drastic changes in the level of tax burden in the Russian economy, as well as in OECD countries during 2000-2011 (except for 2009-2010); it was maintained in the range of 35-36% of GDP. Thus, the level of tax burden in Russia is not too high and is rather comparable with the average level of OECD countries over 2000-2011.
One should also take into account the fact that the amount of the RF budget revenue is largely dependent on exports of primary commodities. Therefore, the tax burden in the RF economy includes a component based on the dynamics of energy products' prices (market component of the tax burden).
According to our estimates, the level of the tax burden in Russia (regardless market component, based on favorable dynamics of global energy market prices) is much lower than that in OECD countries. As shown in Fig. 1, the share of tax revenues of the Russian economy in 2010 amounted to 32.2% of GDP. Herewith, revenues derived from the long-term average oil price (structural) component made 27.2% of the GDP, those from income based on favorable situation in the global energy market component made 3.5% of the GDP, and from the component formed by contribution of other factors (including business cycles, government policy, investor and the public expectations, etc.) made 1.6% of GDP.
Fig. 1. Structural and Market Components of the RF Extended Government Budget Tax Revenue over 2002-2011 (as % of ВВП)
Source: Gaidar Institute estimates based on the Russian Treasury data.
In addition, basing on the structural and market components of the tax revenue of the Russian budget system [2], in Russia corporate income tax is the most sensitive one in terms of external economic situation.
In other words, the tax burden in Russia without regard to its structural component is much lower than in OECD countries. Therefore, the above data illustrates the assumption that in recent years the level of tax burden in the Russian economy is largely dependent on the market component of taxation (primarily corporate income tax), based on high global oil prices.
M.V. Kazakova, Ph.D. in Economics, Head of Economic Development Department
[1www.roskazna.ru.
[2] For details, see: S.G. Sinelnikov-Murylev, P.A. Kadochnikov, M.V. Kazakova, Analysis of the Structural and Market Components of Tax Burden in the Russian economy // IET Research Works No. 129P, 2009, p.189 (also available at the website http://www.iep.ru).