Tax Reform Through the Prism of the First Half of 2025 Results for Regional Budgets

The preliminary results of the first half of 2025 indicate a marked decrease in the growth rate of revenues of the consolidated budgets of the subjects of the Russian Federation in the context of a slowdown in economic activity and a more complicated economic situation in a number of key sectors of the economy. The growth of own revenues of regional budgets takes place against the background of a continuing reduction in the federal transfer payments. Tax reform measures have so far had a more pronounced impact on federal budget revenues than on sub-federal budget revenues. In the first half of the year, there was a reduction in corporate profit tax receipts to regional budgets (with an increase in federal budget revenues from this tax). The growth in personal income tax revenues was more pronounced for federal than for regional budgets. Maintaining an outstripping growth in regional budget expenditures with a slight increase in revenue receipts leads to an increase in budget deficits in the subjects of the Russian Federation and, consequently, to an increase in government sub-federal debt. The write-off of part of the debt of the subjects of the Russian Federation on budget loans in the first half of this year did not affect the upward trend in the volume of government debt of the subjects of the Russian Federation.