Expert: there is not enough demand for federal tax exemptions in the regions

22 april 2016

“In the midst of an extended economic crisis and a shortage of investments a discretionary fiscal policy is a key tool for stimulating economic activity,” said the Analytical Center's expert Daria Andreyeva speaking at an international economic and social development conference organized by the Higher School of Economics. “The ratio of tax exemptions available in the Federal Tax Code to those offered and used by regional authorities is different for different taxes: in the total amount of exemptions for income tax the share of those approved at the regional level is about 10% while for the tax on the property of organizations it is about 45%, for the land tax it is over 80% and for the transport tax it is about 95%.

The expert says that the level of available exemptions compared to the amount of tax revenue from these taxes remains at 10%, half of which comes from exemptions from the tax on the property of organizations, a third comes from the income tax, 15% comes from the land tax and the rest from the transport tax and the tax on the property of individuals.

Exemptions are distributed more evenly for territorial taxes. However, in each region there are marked differences from one industry to another. As a rule, significant exemptions are offered to projects that play a major role in the local economy: for example, construction of a new hydroelectric power plant in the Kolyma hydroelectric power cascade in Magadan Oblast started in 2013 and the project is of major significance for the development of the mining sector in the region. A broad range of exemptions offered by local laws ensures lower investment costs and keeps the average electricity rate from rising.