Fiscal Differentiation of Russian Regions: Scope and Dynamics

Measurement of the budget differentiation of regions for 2006–2022 revealed a complex and heterogeneous picture. There was a shift in the distribution of taxes between the levels of the budget system in favor of the federal budget. However, the reduction in the tax base of more developed regions did not lead to a significant reduction in inequality in budget revenues. There is no general trend in the dynamics of various taxes: in terms of income tax, the differentiation of regions slightly decreased, while for personal income tax, property taxes, and small business taxes it increased. This is a consequence of a complex of factors acting in different directions. The impact of crises on tax revenues to regional budgets is ambiguous. In the 2009, 2015, 2020, and 2022 crises, the inequality dynamics varied across different types of taxes. The leveling effect of transfers was significant only during the 2009 and 2020 crises due to the sharp increase in their volumes. The differentiation of regions is maximum for taxes received by the federal budget, much less for regional budget revenues, and relatively small for budget expenditures on education and social policy. Inequality between regions for per capita expenditures of regional budgets remains very high, despite some mitigation over the past 15 years due to a reduction in the backlog of less developed regions. Reducing the gap in per capita expenditures from the average for federal subjects is more significant for the regions of the Far East, the North Caucasus and most regions of the Center.