Empirical research on institutional constraints on regional tax potential

Specialists are particularly interested in the issues of formation and realisation of the region’s tax potential due to the need to develop economically viable indicators that would be able to identify the feasibility and extent of budget equalization. Generalization of the accumulated scientific experience suggests the creation of an impressive theoretical, methodological and empirical base and its successful application in the practice of intergovernmental fiscal relations on the example of various countries. Particular attention should be paid to the issues relating to the improvement of the achieved level and quality of regional tax potential, since they aim to solve the problems of financial insolvency in the region, rather than just reduce the socially destructive impact of this issue. However, unfortunately, modern Russian practice does not prove the undoubted effectiveness of the proposed implementation of such activities. As we see it, the reason for this situation lies, first, in the presence of local institutional barriers to achieving high-productivity economic activities in the region. Thus, the purpose of the present study is to confirm empirically the existence and to study the forms of institutional limitations concerning the interaction of public authorities and management of the region and the business community, their impact on the level of economic development and the tax potential of region (on example of the Udmurt Republic). The research used methods such as systematic, comprehensive, and correlation analysis, synthesis, deduction, induction, comparison, abstraction, formalization and generalization. In the conditions of Russian realities, the author demonstrates the feasibility of increasing the level and quality of regional tax potential, primarily by increasing economic potential. The article substantiates the prospect of reducing the level of tax potential of a Russian region due to the reduction of the capacity for socio-economic development. On the basis of domestic and foreign experience the article proves the influence of the informal institution of partnership of authorities and management of the region and the business community on the level and quality of tax potential of the region. The research can be applied in the work of civil servants, scientists, experts and analysts of companies.