Regional inequality and its changes: budget projection

Abstract

Measurement of regional budget inequality for 2006–2022 revealed a complex and heterogeneous trends. There was a shift in the distribution of taxes between the levels of the budget system in favor of the federal budget. The reduction in the tax base of more developed regions did not lead to a noticeable mitigation of inequality in budget revenues. There is no general trend in the dynamics of inequality for various taxes: for profit tax it 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 regional budgets tax revenues is ambiguous. During the crises of 2009, 2015, 2020 and 2022 Inequality dynamics varied across different types of taxes. The leveling effect of transfers was more significant only during the crises of 2009 and 2020 due to the sharp increase in their volumes. The level of regional inequality is maximum in terms of taxes received by the federal budget, much less in regional budget revenues, and relatively small in terms of budget expenditures on education and social policy. Inequality between regions in terms of per capita expenditures of regional budgets remains very high, despite some softening over 15 years. The leveling “from below” is more noticeable, due to the reduction of the backlog of less developed regions from the average level. The leveling is more noticeable in the Far East, the North Caucasus and in the regions of the Center.