Evaluating scenarios of a personal income tax reform in Russia

Evgeny V. Balatsky, Natalia A. Ekimova


This article is aimed at evaluating different scenarios of the personal income tax reform in Russia, intended to replace the flat tax scale with a progressive scale. To test the expediency of this plan, the authors present a three-parameter model to calculate the expected effects from different scenarios. The model is based on the idea that the best project should simultaneously reduce the assets ratio, increase budgetary revenue and should minimize the risk of the reform’s non-fulfillment. The research relies on the statistical data on the population’s income distribution. To neutralize distortions, the authors calibrated the initial statistical data on distribution in the high-income group (tenth decile) of the population. The risk of non-fulfillment was assessed through an expert poll. The proposed model was used to test four reform projects, which were developed by the government, the Communist Party, the Liberal Democratic Party, and the party “Just Russia”. It was found that the best project, according to the three parameters applied in the analysis, was the governmental project, which preserves the flat income scale and raises the rate from 13 to 15%. It was also shown that the other projects dramatically overestimated the growth in tax revenues due to incorrect calculations of the distribution of the population’s incomes in the tenth decile group. Thus, at the moment there are no rational alternatives to the governmental project of the reform and there is also no consensus between the Russian opposition parties and the expert community, which prevents them from working together to design a single reform project. It is concluded that at present Russia needs a balanced project which would include multi-step adjustments of the personal income tax over an extended period of time – ten years or more.

For citation

Balatsky E. V., Ekimova N. A. Evaluating scenarios of a personal income tax reform in Russia. Journal of Tax Reform. 2019;5(1):6–22. DOI: 10.15826/jtr.2019.5.1.057

 Article info

Received January 21, 2019; accepted March 18, 2019


progressive personal income tax; flat personal income tax; tax reform, social inequality; budgetary income


Tanzi V. Fiscal Policies in Economies in Transition. Washington, D.C.: International Monetary Fund; 1992.
2. Burgess S. Taxation and Development. Journal of Economic Literature. 1993;31(2):797–801.
3. Cheasty A., Davis J. Fiscal Transition in Countries of the Former Soviet Union: An Interim Assessment. Economic Policy in Transitional Economies. 1996;6:7–34.
4. Dabrowski M., Tomczynska M. Tax Reforms in Transition Economies – a Mixed Record and Complex Future Agenda. Series: Studies and Analyses, CASE, Warsaw; 2001.
5. Hagemann R. P., Jones B. R., Montador B. R. Tax Reform in OECD Countries: Economic Rationale and Consequences. In: OECD Economics Department Working Papers no. 40. 1987. DOI: 10.1787/082177701741
6. Agell J., Englund P., Sodersten J. Tax Reform of the Century – The Swedish Experiment. National Tax Journal. 1996;49(4):643–664.
7. Lodin S. O. The Swedish tax system and inverted imputation. European Taxation; 1996.
8. Sinelnikov-Murylev S., Batkibekov S., Kadochnikov P., Nekipelov D. Assessment of results of reform of income tax in the Russian Federation. Moscow: Scientific works of IEPP; 2003. (In Russ.)
9. Allingam M. G., Sandmo A. Income Tax Evasion: A Theoretical Analysis. Journal of Public Economics. 1972;(1):323–328.
10. Srinivasan T. N. Tax Evasion: A Model. Journal of Public Economics. 1973;(2):339–346.
11. Yitzhaki S. A Note on Income Tax Evasion: A Theoretical Analysis. Journal of Public Economics. 1974;(3):201–202.
12. Lebedev V. V., Lebedev K. V. On the Application of the Verhulst Equation for the Analysis of Monetary Incomes Differentiation in Russia. Economics and Management: problems and solutions. 2017;3(6):218–223. (In Russ.)
13. Grechanyi S. A., Rodin V. A. Rainbow Ratio and Possibility of Introducing a Progressive Tax in Russia. Proceedings of Voronezh State University. Economics and management. 2008;(2);44–47. (In Russ.)
14. Mirrlees J. A. An Exploration in the Theory of Optimum Income Taxation. Review of Economic Studies. 1971;(38):175–208.
15. Saez E. Using Elasticities to Derive Optimal Income Tax Rates. Review of Economics Studies. 2001;(68):205–229.
16. Smirnov R. O. Modeling of Choosing the Parameters of the Income Tax Schedule. St Petersburg University Journal of Economic Studies. 2011;(4):141–148. (In Russ.)
17. Davnis V. V., Rodin V. A. Modeling of the Progressive Taxation in Regions of Russia. Modern Economics: problems and solutions. 2016;(3):8–19. (In Russ.)
18. Ternovskii V. A. Mathematical Models of Taxation, Taking into Account Social Orientation. PhD (Econ.). Thesis. Voronezh; 2012. (In Russ.)
19. Tishchenko A. S. Study of Income Tax Impact on the Structure of Population Expenses based on Modeling. PhD (Econ.). Thesis. Moscow; 2008. (In Russ.)
20. Ashmarina U. V. Taxation of Personal Income in Russia: Prospects for Reform and Assessment of Fiscal Effects. PhD (Econ.). Volgograd; 2016. (In Russ.)
21. Pickhardt M., Seibold G. Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model. CAWM discussion paper. 2011;(53):1–24.
22. Hashimzade N., Myles G., Page F., Rablen M. The Use of Agent-Based Modelling to Investigate Tax Compliance. In: TARC Discussion Paper: 004-13, 2013, pp. 1–29.
23. Flory J., Stöwhase S. MIKMOD-ESt: A Static Microsimulation Model of Personal Income Taxation in Germany. International Journal of Microsimulation. 2012;(5):66–73.
24. Fanti L., Manfredi P. Progressive Income Taxation and Economic Cycles: a Multiplier-Accelerator Model. Discussion Papers del Dipartimento di Scienze Economiche – Università di Pisa. 2003;(11):1–23.
25. Vinokurova T. P. Tax Risk: Economic Essence, Methods of Analysis and Assessment, Directions of Their Improvement. Economics and Management. 2012;(4):103–110. (In Russ.)
26. Laskina L. Y., Vlasova M. S. Tax Risk as an Integral Part of Business Risk. Scientific journal NRU ITMO. Series “Economics and Environmental Management”. 2015;(1):121–130. (In Russ.)
27. Egorova O. Y., Smirnova E. E. Tax Risk Management in a Company in Conditions of Economic Instability. Available at: https://nauchforum.ru/archive/MNF_social/2(21).pdf (In Russ.)
28. Gordeeva O. V. Tax Risks: Concept and Classification. Finance. 2011;(1):33–36. (In Russ.)
29. Elgood T., Paroissien I., Quimby L. Tax Risk Management. Available at: https://www.pwc.com/gx/en/tax-management-strategy/pdf/tax-risk-management-guide.pdf
30. Macijauskas L., Maditinos I. D. Looking for Synergy with Momentum in Main Asset Classes. European Research Studies Journal. 2014;(17):3–16.
31. Polemis M. Panel Data Estimation Techniques and Mark Up Ratios. European Research Studies Journal. 2014;17(1):69–84.
32. Lykova L. N. A return to progressive personal income tax in the Russian Federation: some estimations. Journal of Tax Reform. 2018;4(2):174–187. DOI: 10.15826/jtr.2018.4.2.051
33. Mayburov I. A., Kireenko A. P. Tax reforms and elections in modern Russia. Journal of Tax Reform. 2018;4(1):73–94. DOI: 10.15826/jtr.2018.4.1.046
34. Balatsky E., Ekimova N. Comparative Characteristics of Progressive and Flat Income Tax Scales. Journal of Institutional Studies. 2018;10(3):102–122.
35. Polterovich V. Elements of reform theory. Moscow: Ekonomika; 2007. (In Russ.).

DOI: https://doi.org/10.15826/jtr.2019.5.1.057

Copyright (c) 2019 Evgeny V. Balatsky, Natalia A. Ekimova

eLibrary logoeLibrary logo  DOAJ logo ERIH PLUS logo 

© Journal of Tax Reform : ISSN 2414-9497 (online), ISSN 2412-8872 (print)