Journal of Tax Reform
Competition in Taxation and the Forms of its Implementation among the Subjects of the Russian Federation
Marija A. Troyanskaya
Orenburg State University, Orenburg, Russian Federation
Abstract
The article considers competition in taxation as the condition for territories’ development and the forms of its implementation among regions. Studies of the theoretical aspects of competition in taxation emergence allowed concluding that primarily social relations are its basis. The author defines the concept of competition in taxation as the process of competitive privileges regulation while dealing with public law establishments to share the tax base by attracting mobile production factors and other advantages to achieve sustainable competitiveness. The author also adds her own features to the classification of competition in taxation. The application of this classification helps deeper understanding of this phenomenon in its versatility. Considering tax competition among the Russian Federation subjects in finance-budget sphere allowed seeing several stages in the development of competence in taxation among regions from its implementation through violence to the correct application of fiscal policy tools. The research revealed the main prerequisites of the development of regional competition in taxation in Russia, and provided the ways and measures of its regulation among the RF regions by the state. The duality of the implementation of regional taxation competition’s inner potential is demonstrated through the main directions of its ultimate impact via the fiscal and regulation functions. Considering the forms of the implementation of tax competition among the RF regions provided the opportunity to prioritize among the regional taxes, which allow influencing the competitive advantages of the territories in order to attract investors in their regions. The review of the regulations of all regional authorities allowed making a conclusion about the existence of different positions on participation in competition in taxation. The research demonstrated that most efficient and available forms of taxpayer involvement are establishing additional benefits on regional taxes, differentiation of the income tax rate (its regional part), and that most regions using the tools of competition in taxation bet on the increase of investment attractiveness of their territory
Keywords
Competition in taxation, tax competition, classification of tax competition, types of tax competition, the forms of tax competition implementation
Highlights
1. Competition in taxation is the process of regulation of competitive privileges in the process of social establishments interaction aimed at the sharing of tax bases at the expense of involving mobile production factors and other advantages in order to achieve and keep sustainable competitiveness
2. It is expedient to add two more characteristics — the parameters’ size and the vector of the impact — to the tax competition classification
3. The vertical tax competition by offering tax benefits has objective limitations at the present stage in the Russian Federation
4. There are various positions among the subjects of the Russian Federation on participating in tax competition, most regions rely horizontal competition in taxation through the means that support investment activity at their territory
References
1. Pinskaya M. R. Impact of Tax Competition on the Formation of Models of Tax Fede-ralism. Vestnik Uralskogo gosudarstvennogo tekhnicheskogo universiteta-UPI = Bulletin of the Ural State Technical University-UPI, 2009, no. 4, pp. 138–143. (In Russ.)
2. Janeba E., Osterloh S. Tax and the City — A Theory of Local Tax Competition. Journal of Public Economics, 2013, vol. 106, pp. 89–100.
3. Ogawa H. When ad Valorem Tax Prevails in International Tax Competition. International Review of Economics & Finance, 2016, vol. 46, pp. 1–9.
4. Pi J., Yu Zhou. Tax Competition in Federations Revisited. Economics Letters, 2014, vol. 123, iss. 1, pp. 104–107.
5. Winter S. Symmetric Tax Competition and Lobbying within Federations. European Journal of Political Economy, 2017, vol. 49, pp. 134–145. DOI: https://doi.org/10.1016/j.ejpoleco.2017.02.002.
6. Brangewitz S., Brockhoff S. Sustainability of Coalitional Equilibria within Repeated Tax Competition. European Journal of Political Economy, 2017, vol. 49, pp. 1–23.
7. Olsen T. E., Osmundsen P. Multinationals, Tax Competition and Outside Options. Journal of Public Economics, 2011, vol. 95, iss. 11–12, pp. 1579–1588. DOI: http://dx.doi.org/10.2139/ssrn.1517198.
8. Han Y., Pieretti P., Zou B. An Extension of the Home-Attachment Criteria under Dynamic Tax Competition. Economics Letters, 2013, vol. 121, iss. 3, pp. 508–510. DOI: http://dx.doi.org/10.1016/j.econlet.2013.10.007.
9. Shuvalova E. B., Klimovitsky V. V., Pusin A. M. Nalogovye sistemy zarubezhnykh stran [Tax Systems of Foreign Countries]. Moscow, Dashkov i K Publ., 2010. 134 p.
10. Goodspeed Т. J. Tax Competition, Benefit Taxes, and Fiscal Federalism. National Tax Journal, 1998, vol. 51, no. 3, pp. 582.
11. Field T. F. Tax Competition in Europe and America. State Tax Notes, 2003, 31 March, pp. 1211–1216.
12. Pogorletskiy A. I. Russia’s Tax Competitiveness in the Context of the Safe Development of Modern Society. Vestnik Uralskogo federalnogo universiteta. Seriya. Ekonomika i upravlenie = Bulletin of the Ural Federal University. Series. Economics and Management, 2012, no. 3, pp. 125–134. (In Russ.)
13. Puzin A. M. Interstate Tax Competition: Sources and Prospects. Ekonomika, statistika i informatika. Vestnik UMO = Economics, statistics and informatics. Bulletin of the UMO, 2010, no. 4, pp. 40–44. (In Russ.)
14. Ivanov Y. B., Chumakova O. O. Concerning Definition of Types of the Tax Competition. Ekonomika razvitiya = Development Economy, 2010, no. 1, pp. 5–8. (Ukrain.)
15. Leonova N. A., Kolesnik G. V. Evaluation of the Impact of Intergovernmental Fiscal Relations on the Nature of Tax Competition. Vestnik Tverskogo gosudarstvennogo universiteta. Seriya. Prikladnaya matematika = Bulletin of Tver State University. Series. Applied Mathematics, 2008, no. 11, pp. 83–92. (In Russ.)
16. Bozulenko O. Y. Concerning Regulation of the Tax Competition at the International Level. Ekonomіst, 2008, no. 4, pp. 44–47. (Ukrain.)
17. Pinskaya M. R. Nalogovaya konkurentsiya: ot teorii k praktike [Tax Competition: from Theory to Practice]. Moscow, INFRA-M Publ., 2013. 136 p.
18. Lajchenkova N. N. Tax Competition as a Tool for Increasing the Efficiency of Regional Taxation and Tax Law. Informatsionnaya bezopasnost regionov = Information Security of Regions, 2015, no. 2 (19), pp. 53–56. (In Russ.)
19. Mayburov I. A., Ivanov Yu. B. (eds) Entsiklopediya teoreticheskikh osnov nalogooblozheniya [Encyclopedia of Theoretical Bases of Taxation]. Moscow, UNITY-DANA Publ., 2016. 503 p.
20. Troyanskaya M. A. Tax Competition: the Concept, Species, Meaning. Nalogi i finansovoe pravo = Taxes and Financial Law, 2014, no. 6, pp. 179–185. (In Russ.)
21. Pogorletskiy A. I. International Tax Competition at the Present Stage of the World Economy Development. Problemi ekonomіki = Problems of Economics, 2011, no. 2, pp. 3–9. (In Russ.)
22. Larina Т. В. Analysis of the Grounds for the Existence of Tax Competition in the Subjects of the Russian Federation. Izvestiya vysshikh uchebnykh zavedenii. Seriya. Ekonomika, finansy i upravlenie proizvodstvom = Izvestiya Vysshikh Uchebnykh Zavedenii. Series: Economics, Finance and Production Management, 2011, no. 2, pp. 40–45. (In Russ.)
23. Ped І. V. Podatkova konkurentsіya [Tax Competition]. Kiev, Expert-Consulting Publ., 2009. 416 p.
24. Ped І. V. Modern Forms of the Tax Competition. Formuvannya rinkovikh vіdnosin v Ukraїnі = Formation of the Market Relations in Ukraine, 2008, no. 11 (90), pp. 35–38. (Ukrain.)
25. Troyanskaya M. A. Development of Theories of Tax Competition as a Reflection of the Rivalry of Territories. Regionalnaya ekonomika: teoriya i praktika = Regional Economy: Theory and Practice, 2014, no. 25, pp. 48–54. (In Russ.)
26. Chuzhmarova S. I. Methodological bases of development of tax competitiveness of northern regions. Vestnik Uralskogo federalnogo universiteta. Seriya. Ekonomika i upravlenie = Bulletin of the Ural Federal University. Series. Economics and Management, 2013, no. 2, pp. 145–155. (In Russ.)
27. Kireenko A. P., Orlova E. N. Manifestations of the Regional Tax Policy in the Conditions of Russian Budgetary Federalism. Region: ekonomika i sotsiologiya = Region: Economics and Sociology, 2014, no. 1 (81), pp. 193–217. (In Russ.)
28. Troyanskaya M. A. Monitoring of the use of Mechanisms of Tax Competition by Subjects of the Russian Federation. Finansy i kredit = Finance and Credit, 2014, no. 33, pp. 51–60. (In Russ.)
29. Goncharenko L. I., Melnikova N. P. On New Approaches to the Policy of Applying Tax Incentives and Preferences in Order to Stimulate Economic Development. Ekonomika. Nalogi. Pravo = The Economy. Taxes. Right, 2017, vol. 10, no. 2, pp. 96–104. (In Russ.)
30. Parfenova L. B., Pugachev A. A. Tax Competition at the Subfederal Level as a Factor in the Development of the Region’s Tax Potential in the Context of Russia’s Accession to the WTO. Sbornik nauchnykh trudov Sworld = Collected Scientific Papers Sworld, 2012, vol. 21, no. 2, pp. 30–34. (In Russ.)1. Pinskaya M. R. Impact of Tax Competition on the Formation of Models of Tax Fede-ralism. Vestnik Uralskogo gosudarstvennogo tekhnicheskogo universiteta-UPI = Bulletin of the Ural State Technical University-UPI, 2009, no. 4, pp. 138–143. (In Russ.)
2. Janeba E., Osterloh S. Tax and the City — A Theory of Local Tax Competition. Journal of Public Economics, 2013, vol. 106, pp. 89–100.
3. Ogawa H. When ad Valorem Tax Prevails in International Tax Competition. International Review of Economics & Finance, 2016, vol. 46, pp. 1–9.
4. Pi J., Yu Zhou. Tax Competition in Federations Revisited. Economics Letters, 2014, vol. 123, iss. 1, pp. 104–107.
5. Winter S. Symmetric Tax Competition and Lobbying within Federations. European Journal of Political Economy, 2017, vol. 49, pp. 134–145. DOI: https://doi.org/10.1016/j.ejpoleco.2017.02.002.
6. Brangewitz S., Brockhoff S. Sustainability of Coalitional Equilibria within Repeated Tax Competition. European Journal of Political Economy, 2017, vol. 49, pp. 1–23.
7. Olsen T. E., Osmundsen P. Multinationals, Tax Competition and Outside Options. Journal of Public Economics, 2011, vol. 95, iss. 11–12, pp. 1579–1588. DOI: http://dx.doi.org/10.2139/ssrn.1517198.
8. Han Y., Pieretti P., Zou B. An Extension of the Home-Attachment Criteria under Dynamic Tax Competition. Economics Letters, 2013, vol. 121, iss. 3, pp. 508–510. DOI: http://dx.doi.org/10.1016/j.econlet.2013.10.007.
9. Shuvalova E. B., Klimovitsky V. V., Pusin A. M. Nalogovye sistemy zarubezhnykh stran [Tax Systems of Foreign Countries]. Moscow, Dashkov i K Publ., 2010. 134 p.
10. Goodspeed Т. J. Tax Competition, Benefit Taxes, and Fiscal Federalism. National Tax Journal, 1998, vol. 51, no. 3, pp. 582.
11. Field T. F. Tax Competition in Europe and America. State Tax Notes, 2003, 31 March, pp. 1211–1216.
12. Pogorletskiy A. I. Russia’s Tax Competitiveness in the Context of the Safe Development of Modern Society. Vestnik Uralskogo federalnogo universiteta. Seriya. Ekonomika i upravlenie = Bulletin of the Ural Federal University. Series. Economics and Management, 2012, no. 3, pp. 125–134. (In Russ.)
13. Puzin A. M. Interstate Tax Competition: Sources and Prospects. Ekonomika, statistika i informatika. Vestnik UMO = Economics, statistics and informatics. Bulletin of the UMO, 2010, no. 4, pp. 40–44. (In Russ.)
14. Ivanov Y. B., Chumakova O. O. Concerning Definition of Types of the Tax Competition. Ekonomika razvitiya = Development Economy, 2010, no. 1, pp. 5–8. (Ukrain.)
15. Leonova N. A., Kolesnik G. V. Evaluation of the Impact of Intergovernmental Fiscal Relations on the Nature of Tax Competition. Vestnik Tverskogo gosudarstvennogo universiteta. Seriya. Prikladnaya matematika = Bulletin of Tver State University. Series. Applied Mathematics, 2008, no. 11, pp. 83–92. (In Russ.)
16. Bozulenko O. Y. Concerning Regulation of the Tax Competition at the International Level. Ekonomіst, 2008, no. 4, pp. 44–47. (Ukrain.)
17. Pinskaya M. R. Nalogovaya konkurentsiya: ot teorii k praktike [Tax Competition: from Theory to Practice]. Moscow, INFRA-M Publ., 2013. 136 p.
18. Lajchenkova N. N. Tax Competition as a Tool for Increasing the Efficiency of Regional Taxation and Tax Law. Informatsionnaya bezopasnost regionov = Information Security of Regions, 2015, no. 2 (19), pp. 53–56. (In Russ.)
19. Mayburov I. A., Ivanov Yu. B. (eds) Entsiklopediya teoreticheskikh osnov nalogooblozheniya [Encyclopedia of Theoretical Bases of Taxation]. Moscow, UNITY-DANA Publ., 2016. 503 p.
20. Troyanskaya M. A. Tax Competition: the Concept, Species, Meaning. Nalogi i finansovoe pravo = Taxes and Financial Law, 2014, no. 6, pp. 179–185. (In Russ.)
21. Pogorletskiy A. I. International Tax Competition at the Present Stage of the World Economy Development. Problemi ekonomіki = Problems of Economics, 2011, no. 2, pp. 3–9. (In Russ.)
22. Larina Т. В. Analysis of the Grounds for the Existence of Tax Competition in the Subjects of the Russian Federation. Izvestiya vysshikh uchebnykh zavedenii. Seriya. Ekonomika, finansy i upravlenie proizvodstvom = Izvestiya Vysshikh Uchebnykh Zavedenii. Series: Economics, Finance and Production Management, 2011, no. 2, pp. 40–45. (In Russ.)
23. Ped І. V. Podatkova konkurentsіya [Tax Competition]. Kiev, Expert-Consulting Publ., 2009. 416 p.
24. Ped І. V. Modern Forms of the Tax Competition. Formuvannya rinkovikh vіdnosin v Ukraїnі = Formation of the Market Relations in Ukraine, 2008, no. 11 (90), pp. 35–38. (Ukrain.)
25. Troyanskaya M. A. Development of Theories of Tax Competition as a Reflection of the Rivalry of Territories. Regionalnaya ekonomika: teoriya i praktika = Regional Economy: Theory and Practice, 2014, no. 25, pp. 48–54. (In Russ.)
26. Chuzhmarova S. I. Methodological bases of development of tax competitiveness of northern regions. Vestnik Uralskogo federalnogo universiteta. Seriya. Ekonomika i upravlenie = Bulletin of the Ural Federal University. Series. Economics and Management, 2013, no. 2, pp. 145–155. (In Russ.)
27. Kireenko A. P., Orlova E. N. Manifestations of the Regional Tax Policy in the Conditions of Russian Budgetary Federalism. Region: ekonomika i sotsiologiya = Region: Economics and Sociology, 2014, no. 1 (81), pp. 193–217. (In Russ.)
28. Troyanskaya M. A. Monitoring of the use of Mechanisms of Tax Competition by Subjects of the Russian Federation. Finansy i kredit = Finance and Credit, 2014, no. 33, pp. 51–60. (In Russ.)
29. Goncharenko L. I., Melnikova N. P. On New Approaches to the Policy of Applying Tax Incentives and Preferences in Order to Stimulate Economic Development. Ekonomika. Nalogi. Pravo = The Economy. Taxes. Right, 2017, vol. 10, no. 2, pp. 96–104. (In Russ.)
30. Parfenova L. B., Pugachev A. A. Tax Competition at the Subfederal Level as a Factor in the Development of the Region’s Tax Potential in the Context of Russia’s Accession to the WTO. Sbornik nauchnykh trudov Sworld = Collected Scientific Papers Sworld, 2012, vol. 21, no. 2, pp. 30–34. (In Russ.)
About Authors
Marija A. Troyanskaya — PhD in Economics, Associate Professor, Associate Professor of the Department of Finance, Orenburg State University, Orenburg, Russian Federation (13 Pobedy Avenue, 460018, Orenburg, Russian Federation); ORCID https://orcid.org/0000-0003-4545-3786; e-mail: m_troyanskaya@mail.ru
For citation
Troyanskaya M. A. Competition in Taxation and the Forms of its Implementation among the Subjects of the Russian Federation. Journal of Tax Reform, 2017, vol. 3, no. 3, pp. 182–198. DOI: dx.doi.org/10.15826/jtr.2017.3.3.039
Article info
Received October 1, 2017; accepted November 13, 2017
DOI: http://dx.doi.org/10.15826/jtr.2017.3.3.039
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