Failures of Big Business Tax Administration and Their Impact on Regional Budgets

Abstract

The destabilization processes of the Russian Federations budget system, primarily at the regional level, are becoming longterm in their nature. It is necessary to find ways to overcome these processes. The current measures by the authorities are aimed at reducing budget expenditures and will not solve the existing problems. In the authors’ opinion, these are, first of all, the failures of tax policy concerning the major taxpayers. The main purpose of the article is to provide the selected research results of the Institute of Socio-Economic Development of Territories of the Russian Academy of Sciences on the taxation of major oil and metals corporations, their relations with both federal and regional budgets. The analysis of regulatory acts allowed to conclude that the standard practice of major taxpayers’ tax administration hardly corresponds to the basic principles of taxation. As a result, in recent years, revenues from the main income source of the territories - income tax steadily decline; industrial production development is limited by the inefficient tax concession system and the increasing costs, corporate management imbalances. These imbalances suppose that the interests of private capital owners and the management of state corporations prevail over the solution of the issues of social development. The paper proposes some measures to improve the profit taxation and increase the fiscal function of income tax. We have developed a differentiated scale of refunds from the budget of value-added tax paid by large commodity exporters with a view to provide incentives for increasing exports of competitive products. The article also suggests that with continued centralization of the system of tax distribution across government levels, a part of additional revenues generated through the implementation of a selective approach to the provision of tax incentives could be used to increase financial support of the regions.