Regional tax gap and assessment of its determining factors

Reduction of the tax gap at the regional level contributes to development of tax potential and the increase of regions’ budget security. The purpose of the article is to study the tax gap at the regional level in the Russian Federation (RF) on the basis of a comprehensive assessment of factors that determine it. Approaches to the determination of the tax gap at regional and national levels are summarized. Factors that form the tax gap are defined. Due to the purpose of the study, it includes the amount of taxes and fees’ arrears, the amount of additional taxes and fees in case of tax inspections’ continuous coverage of taxpayers, and the scale of the shadow economy. The developed methodology for analyzing the structure and dynamics of regional tax gap factors is presented. It allows assessing its size, structure, and the work quality of region’s tax and financial authorities. Besides, it allows identifying opportunities for reducing the tax gap. A variant of grouping entities of the Federation regarding the state and prospects of reducing the tax gap, formed on the basis of the ratio of its level and dynamics, is proposed. Grouping of regions helps to conduct its comparative analysis according to the tax gap and its determining factors. The potential for reducing the tax gap in Russia by improving the quality of tax administration has been largely implemented. The work with tax arrears opens up opportunities for financial and tax authorities. The shadow economy has the largest share in the tax gap, which actualizes the importance of conducting the comprehensive work of the state to legalize it.